Postal Rate Commission
Submitted 6/28/2006 4:40 pm
Filing ID: 49983
Accepted 6/29/2006
BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON, D.C. 20268-0001
POSTAL RATE AND FEE CHANGES
Docket No. R2006-1
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO
PRESIDING OFFICER’S INFORMATION REQUEST NO. 5,
QUESTIONS 2-19
(June 29, 2006)
The United States Postal Service hereby provides the responses to Presiding
Officer’s Information Request (POIR) No. 5, Questions 2-19, issued June 14, 2006. The
following witnesses are sponsoring the identified responses to this POIR:
Witness Taufique
Question 2a and 2c
Witness Kiefer (T36)
Questions 2a and 3
Witness Yeh
Questions 2b and 9b
Institutional Response
Questions 4, 5, 10, 11
Witness Riddle
Questions 6 and 7
Witness Milanovic
Questions 8, 12a, 12c, and 17 a-b
Witness Kiefer (T-37)
Questions 9a
Witness Kelley
Questions 12b, 12d, 13, 14, 15, 16a, 16 c, 17c-f, and
18, 19
Witness Harahush
Question 16b, d and e
Each question is stated verbatim and is followed by the response.
Respectfully submitted,
UNITED STATES POSTAL SERVICE
By its attorneys:
Daniel J. Foucheaux, Jr.
Chief Counsel, Ratemaking
_______________________
Nan K. McKenzie
475 L'Enfant Plaza West, S.W.
Washington, D.C. 20260–1137
(202) 268–3089; Fax –5402
RESPONSE OF U. S. POSTAL SERVICE WITNESS TAUFIQUE TO PRESIDING
OFFICER’S INFORMATION REQUEST (POIR) No. 5, QUESTION 2
2. In Docket No. MC95-1, the Postal Service developed unit attributable cost from
the “bottom up,” by shape, for the presort and prebarcoded rate categories inFirstClass and Standard Mail. Total unit attributable cost for each rate category was
equal to the sum of unit attributable mail processing cost, unit attributable delivery
cost, unit attributable transportation cost, and all other unit attributable costs. See
Docket No. MC95-1, Exhibit USPS-T-12C. The Postal Service proposed to use
differences in unit total attributable cost as the basis for setting the discounts (i.e.,
the rate differentials) between rate categories. The Commission rejected that
approach in favor of using only differences in unit attributable mail processing
costs plus unit attributable delivery costs (in-office and street time) as the basis for
rate differences. The Commission explained that presorting and prebarcoding
would only directly affect mail processing and delivery costs and that any other
differences in total attributable cost would bedue to factors other than worksharing.
PRC Op. MC95-1, paras. 4208-13. Accordingly, beginning with the restructured
rates implemented in Docket No. MC95-1, worksharing differentials in First-Class,
Standard Mail, and Periodicals (excluding dropship discounts) have been based on
differences in both unit attributable mail processing costs and unit attributable
delivery costs.
In the current docket, the cost basis of the Postal Service’s proposed
worksharing discounts varies from subclass to subclass. First-Class worksharing
rate differentials are based on unit attributable mail processing costs. The
piecebased worksharing differentials in Periodicals reflect differences in both unit
attributable mail processing costs and unit attributable delivery costs. The
worksharing rate differentials in Standard Regular and Regular Nonprofit reflect
only differences in unit attributable mail processing cost. Worksharing rate
differentials in Enhanced Carrier Route and Non-Profit Enhanced Carrier Route
reflect differences in both unit attributable mail processing and delivery costs.
a.
A review of the unit attributable delivery costs in USPS-LR-L-67, Table
1,shows that for some subclasses, delivery costs vary only by shape. Thus,
for example, within a flat-shaped mail category, the unit attributable delivery
cost would be the same for each presort and barcode category. This could be
a reason for ignoring delivery cost, at least when calculating presort/barcode
discounts. However, in First-Class there are differences in unit attributable
delivery cost between nonautomated letters and automated letters and in
Standard Mail there are differences in unit attributable delivery cost between
nonmachinable and machinable letters. The rate design witnesses for FirstClass and Standard Mail have not provided a rationale for departing from the
“MC95-1” approach and ignore those differences. The Postal Service is
requested to have the appropriate witness for each subclass provide a
rationale for departing from the MC95-1 approach, or, if the Postal Service
prefers, provide revised rate design spreadsheets that incorporate both
differences in mail processing and delivery unit attributable cost.
b. The rate design for Bound Printed Matter (BPM) proposed by the Postal
Service is also inconsistent with the precedent established in Docket No.
MC95-1. The proposed presort differentials are based on unit mail processing
attributable cost only, which is consistent with past rate cases, but the flat-
RESPONSE OF U. S. POSTAL SERVICE WITNESS TAUFIQUE TO PRESIDING
OFFICER’S INFORMATION REQUEST (POIR) No. 5, QUESTION 2
c.
parcel differential is based on only differences in unit attributable delivery
cost. Similarly, Media Mail presort discounts are based on differences only in
unit attributable mail processing costs, ignoring unit attributable delivery
costs. In Docket No. R2001-1, the Postal Service acknowledged that BPM
shape-related cost differences could include mail processing cost differences,
adding that it would explore this possibility in future rate cases. (See Docket
No. R2001 -1, USPS-T-33 at 30.) The Postal Service is requested to have its
rate design witness for BPM and Media Mail provide a rationale for departing
from the MC95-1 approach, or alternatively, to provide revised rate design
spreadsheets that incorporate unit attributable costs for both mail processing
and delivery.
In prior rate cases, the Postal Service provided the unit attributable delivery
cost for all letter rate categories in First-Class Mail and Standard Mail. (See,
for example, Docket No. R2005-1, USPS-LR-K-67, Table 1.) The separate
rate category unit costs reflected differences in the percentage of DPS letters.
As noted above, in this docket, the Postal Service has not provided unit
attributable delivery cost for all letter rate categories. Please provide the
rationale for not calculating unit attributable delivery costs for all letter rate
categories reflecting differences in the percentage of DPS mail.
RESPONSE
a. In First-Class Mail rate design, the differences between automation and
nonautomation letters are derived using both the mail processing and
delivery volume variable unit cost differences. Please see LR-L-129, WPFCM 19, ‘Rate Design - Presort’ Row 74, Columns C through F. Lines 13
and 14 on page 37 of my testimony will be revised to reflect it. An errata will
be filed.
b. Response filed by witness Yeh.
c. It is my understanding that the differences in delivery costs for the various
presort levels of automation are driven solely by the different Delivery Point
Sequencing (DPS) figures that come from the letter model estimated by
witness Abdirahman, USPS-T-22. Those differences happen because the
less presorted the letters are, the more equipment they go across and thus,
RESPONSE OF U. S. POSTAL SERVICE WITNESS TAUFIQUE TO PRESIDING
OFFICER’S INFORMATION REQUEST (POIR) No. 5, QUESTION 2
the more opportunities they have to be rejected. However, the reject rates
for the various letter sorting equipment are not unique to class and/or rate
category of the letters in question and reflect all of the letters worked on that
equipment. It is my understanding that DPS percentages are not an input to
the cost models and there are no data indicating that DPS percentages
actually differ among the presort rate categories. Furthermore, the reject
rates that create the differences in the DPS percentages and resulting
different delivery costs for the various presort levels for letters could be
affected by the reject rates for single-piece letters, which is not a component
of the cost models.
RESPONSE OF U. S. POSTAL SERVICE WITNESS KIEFER (USPS-T-36) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, 2a (Standard Mail)
2a
In Docket No. MC95-1, the Postal Service developed unit attributable cost from
the “bottom up,” by shape, for the presort and prebarcoded rate categories in FirstClass and Standard Mail. Total unit attributable cost for each rate category was equal
to the sum of unit attributable mail processing cost, unit attributable delivery cost, unit
attributable transportation cost, and all other unit attributable costs. See Docket No.
MC95-1, Exhibit USPS-T-12C. The Postal Service proposed to use differences in unit
total attributable cost as the basis for setting the discounts (i.e., the rate differentials)
between rate categories. The Commission rejected that approach in favor of using only
differences in unit attributable mail processing costs plus unit attributable delivery costs
(in-office and street time) as the basis for rate differences. The Commission explained
that presorting and prebarcoding would only directly affect mail processing and delivery
costs and that any other differences in total attributable cost would be due to factors
other than worksharing. PRC Op. MC95-1, paras. 4208-13. Accordingly, beginning
with the restructured rates implemented in Docket No. MC95-1, worksharing
differentials in First-Class, Standard Mail, and Periodicals (excluding dropship
discounts) have been based on differences in both unit attributable mail processing
costs and unit attributable delivery costs.
In the current docket, the cost basis of the Postal Service’s proposed
worksharing discounts varies from subclass to subclass. First-Class worksharing rate
differentials are based on unit attributable mail processing costs. The piece-based
worksharing differentials in Periodicals reflect differences in both unit attributable mail
processing costs and unit attributable delivery costs. The worksharing rate differentials
in Standard Regular and Regular Nonprofit reflect only differences in unit attributable
mail processing cost. Worksharing rate differentials in Enhanced Carrier Route and
Non-Profit Enhanced Carrier Route reflect differences in both unit attributable mail
processing and delivery costs.
a.
A review of the unit attributable delivery costs in USPS-LR-L-67, Table 1, shows
that for some subclasses, delivery costs vary only by shape. Thus, for example,
within a flat-shaped mail category, the unit attributable delivery cost would be the
same for each presort and barcode category. This could be a reason for ignoring
delivery cost, at least when calculating presort/barcode discounts. However, in
First-Class there are differences in unit attributable delivery cost between
nonautomated letters and automated letters and in Standard Mail there are
differences in unit attributable delivery cost between nonmachinable and
machinable letters. The rate design witnesses for First-Class and Standard Mail
have not provided a rationale for departing from the “MC95-1” approach and ignore
those differences. The Postal Service is requested to have the appropriate witness
for each subclass provide a rationale for departing from the MC95-1 approach, or,
if the Postal Service prefers, provide revised rate design spreadsheets that
incorporate both differences in mail processing and delivery unit attributable cost.
RESPONSE OF U. S. POSTAL SERVICE WITNESS KIEFER (USPS-T-36) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, 2a (Standard Mail)
RESPONSE:
The cost differences included in the Standard Mail Regular workpapers did not
include delivery cost differences by presort tier because the available delivery cost
estimates did not vary by presort tier. Where delivery costs did vary (as by density tier
for ECR mail), these costs were included. In this sense my approach is consistent with
the MC95-1 approach.
In the case of machinable and nonmachinable letters, the delivery cost
differences are included in the costs for the base pieces shown in line 7 of WPSTDREG-26 (labeled “Mail Processing + Delivery Costs,” in cell D7 for machinable
letters and E7 for nonmachinable letters. These mail processing and delivery costs were
used to produce the starting point Basic Rate Per Piece and Rate Per Pound (for each
of the group benchmark pieces) which then were modified to reflect presort, automationnonautomation, and entry differences. Because of this, the delivery cost differences
between machinable and nonmachinable pieces were incorporated (partially) in the
base piece and then, since the base piece per piece rate element and per pound rate
element for machinable (or nonmachinable) letters fed into all machinable (or
nonmachinable) letter rates (as can be seen by successively applying Excel’s Trace
Dependents function to these base piece rate elements), the delivery cost differences
between machinable and nonmachinable letters did figure into the proposed rates.
Again, although the mechanism I used differs from what was used in the past (for
example I did not use an explicit passthrough), my approach is consistent with the
MC95-1 approach. Please see my response to POIR 5, No. 3 to see the implicit
passthrough for the combined mail processing/delivery cost differences into the rate
elements for machinable/nonmachinable letters.
RESPONSE OF UNITED STATES POSTAL SERVICE WITNESS YEH
TO PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5
2b The rate design for Bound Printed Matter (BPM) proposed by the Postal Service is
also inconsistent with the precedent established in Docket No. MC95-1. The proposed
presort differentials are based on unit mail processing attributable cost only, which is
consistent with past rate cases, but the flat-parcel differential is based on only
differences in unit attributable delivery cost. Similarly, Media Mail presort discounts are
based on differences only in unit attributable mail processing costs, ignoring unit
attributable delivery costs. In Docket No. R2001-1, the Postal Service acknowledged
that BPM shape-related cost differences could include mail processing cost differences,
adding that it would explore this possibility in future rate cases. (See Docket No.
R2001-1, USPS-T-33 at 30.) The Postal Service is requested to have its rate design
witness for BPM and Media Mail provide a rationale for departing from the MC-95-1
approach, or alternatively, to provide revised rate design spreadsheets that incorporate
unit attributable costs for both mail processing and delivery.
RESPONSE
My rate design approach for BPM and Media Mail is consistent with the Postal Service’s
methodology in R2001-1. Estimates of mail processing cost differences between BPM
flats and parcels were not available to me at the time I developed BPM rates. In the
spirit of recognizing that mail processing cost differences may be an additional cost
difference between BPM flats and parcels, I proposed to passthrough over 100 percent
of delivery cost differences for the BPM flat-parcel differential. Inspection of witness
Marc Smith’s estimates of the mail processing cost differences between BPM flats and
parcels reveals that a more than 100 percent passthrough for delivery-only BPM flatparcel differential was justified. The Postal Service intends to examine the combined
delivery and mail processing cost differences more in depth and propose an appropriate
passthrough for use in future rate cases.
Media Mail presort discounts are based on differences only in unit attributable mail
processing costs, not unit attributable delivery costs because it is my understanding that
data reflecting differences in unit attributable delivery costs among Media Mail are not
RESPONSE OF UNITED STATES POSTAL SERVICE WITNESS YEH
TO PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5
available, and there is little reason to expect delivery costs to vary by presort tier for
these pieces.
RESPONSE OF U.S. POSTAL SERVICE WITNESS KIEFER (USPS-T-36) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, QUESTION 3
3.
In previous omnibus rate cases, beginning with Docket No. R90-1, the Postal
Service’s direct testimony on rate design has included a discussion of the rationale for
its selected percentage passthroughs of shape-related costs into the discounted rates.
The “presort tree” presented by the Postal Service provided an analytical framework for
evaluating percentage passthroughs for presort, automation, and shape-related costs.
Its essential feature was the use of a single benchmark rate with which all other
subclass rates could be compared. See Docket No. R90-1, USPS-T-20 at 89-127. This
analytical framework improved the Commission’s understanding of the Postal Service’s
rationale underlying its rate design, and facilitated its application of the policies of the
Postal Reorganization Act and its pricing factors to the Postal Service’s proposed rates.
In subsequent rate cases, this approach also made it feasible to evaluate each
discounted rate in a subclass for consistency with the principle of Efficient Component
Pricing.
For each of the Standard Mail subclasses, the Postal Service in this docket has
apparently abandoned the comprehensive approach to rate design that is illustrated
graphically by use of the presort tree. The Postal Service’s proposed rates in this
docket are based on multiple benchmarks, rather than the traditional single benchmark
rate that was the essence of the “presort tree” methodology. The Postal Service’s rate
design testimony does not include any discussion of percentage passthroughs of
shape-related cost differences into the proposed rates and the consistency of those
implied passthroughs with the pricing factors of the Act. To facilitate evaluation of the
Postal Service’s proposed discounted rates with the pricing factors of the Act, as well as
the principle of Efficient Component Pricing:
a.
b.
c.
Please provide the rationale for abandoning the presort tree methodology in favor
of using multiple benchmarks in designing rates within each of the subclasses of
Standard Mail.
Please evaluate the amount of each proposed discount in relation to the subclass
piece that is most costly in terms of all relevant characteristics including shape,
automation compatibility, machinability, and presort level. To assist the Postal
Service in responding to this item, two presort trees are diagramed in the
attachments to this Presiding Officer’s Information Request. Either analytical
approach could be used to relate all percentage passthroughs of cost differences
in the Standard Regular subclass to one another. Attachment 1 illustrates a
presort tree that is consistent with the rate design methodology that underlies the
discounted rates for Standard Regular mail that was recommended in Docket No.
R2000-1. Attachment 2 illustrates a presort tree that reflects the way the Postal
Service has apparently developed proposed rates for Standard Regular mail in this
docket. In responding to this item, the Postal Service may use these, or any other
framework, that relates the percentage passthroughs implied by each discounted
rate to all other discounted rates within the subclass.
In previous rate cases, automation discounts in Standard Mail have been
calculated as the difference in avoidable worksharing unit cost between a
nonautomated presort category and the corresponding automated rate category.
The cost difference was then multiplied by a percentage passthrough to calculate
the discount. In this docket, the Postal Service proposes to calculate automation
discounts with reference only to other automation categories. Please provide the
RESPONSE OF U.S. POSTAL SERVICE WITNESS KIEFER (USPS-T-36) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, QUESTION 3
rationale for calculating all automation discounts without reference to
nonautomation rates.
RESPONSE
a.
My understanding of the “presort tree methodology” described in the question is an
approach to rate making that consists of four steps:
1.
Choosing the most costly piece in the subclass as the single benchmark
piece for the subclass.
2.
Selecting a rate (or combination or rate elements) for the benchmark piece.
3.
Identifying a series of cost differences between every other piece and the
benchmark piece, either directly or indirectly (that is, through intermediate
pieces).
4.
Selecting passthroughs for each of the costs differences to develop the rates
for all other pieces.
In my view, the “presort tree methodology” works reasonably well when the
following enabling conditions are met:
a.
The subclass has a relatively small number of workshared categories.
b.
The benchmark is a significant rate category within the subclass.
c.
Most workshare activities are closely related to the benchmark rate category.
In contrast to the “presort tree methodology” (outlined in steps one to four above),
a presort tree that provides a visual aid for charting passthroughs retains some
conceptual value even when some of the above enabling conditions are no longer
present. Nevertheless, I think that even the presort tree loses considerable value
as these enabling conditions weaken and fail.
It is instructive to consider these enabling conditions within the context of
Standard Mail Regular today. The current rate structure for Standard Mail Regular
is already highly differentiated by presort level, mail piece shape, automation
compatibility, and machinability. And, in this case, the Postal Service is proposing
RESPONSE OF U.S. POSTAL SERVICE WITNESS KIEFER (USPS-T-36) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, QUESTION 3
significant increases in the number of rate categories. Choosing a single
benchmark rate category from which all other rates must flow is not mathematically
or analytically impossible, although it becomes computationally cumbersome and
logically less and less compelling as the number of workshare categories
increases.
The “presort tree methodology” makes the most sense when the benchmark
is a substantial rate category within the subclass. Over time, with expanded
workshare discounts, Standard Mail has shifted so that the traditional benchmark
piece, a Basic Presort Nonletter (Flat) had already shrunk to a small proportion of
total Standard Mail Regular by the last time the “presort tree methodology” was
used (Docket No. R2001-1). Yet, even then, it did have the advantage of being
conceptually closely related to more heavily workshared flats, which make up a
significant proportion of Standard Mail Regular volume. In contrast, the most
costly piece in the current docket’s proposed rate design is a nonmachinable
parcel. According to the Postal Service’s volume forecasts, there will be less than
100 million nonmachinable parcels in Standard Mail Regular in the TYAR, less
than 0.2% of total subclass pieces. This is not a numerically substantial rate
category and, in my view, it doesn’t make rate design sense to start from and tie
all Standard Mail Regular rates to a category with such a small presence in the
mix.
I think it is also questionable, for example, to link the presort rate design for
flats to the presort design for nonmachinable parcels (see my response to
subpart (b) which uses a modified version of the question’s Attachment 2 presort
tree). Flats and parcels have different mail processing paths; use different kinds
of machine sorting; and are finalized differently in plants. Consequently, they
have different mail makeup requirements. It is not clear to me that calculating a
“passthrough” for the “cost differences” between, for example, 3-digit
RESPONSE OF U.S. POSTAL SERVICE WITNESS KIEFER (USPS-T-36) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, QUESTION 3
nonmachinable parcels and 3-digit nonautomation flats is very instructive. The
key relationships, in my view, are those that go down the branches: how a 3-digit
nonmachinable parcel rate relates to a Mixed ADC parcel rate and how a 3-digit
nonautomation flat rate relates to a Mixed ADC flat rate. For this reason, I believe
it is useful, when designing rates, to choose separate benchmarks for the
separate logical categories (flats and parcels, for example) and then focus more
carefully on reasonable rate relationships down the branches. Naturally, costs
and other factors will need to be considered in the relationships between the
major branches. But this does not require developing passthroughs that relate,
for example, 3-digit presorted letters, automation flats, nonautomation flats, etc.
all back to 3-digit nonmachinable parcels through a daisy-chain of sometimes
questionable passthrough calculations.
In summary, with the Postal Service’s proposals in this case, Standard
Mail will become increasingly complex. Yet this complexity has a logic of its own
within it: a shape-based rate design to reflect the underlying shape-based mail
flows. In my view, a more categorized, multiple-benchmark approach fits the
complexity better than force-fitting rate design back into the traditional singlebenchmark “presort tree methodology.” In reality, once each benchmark is
chosen, my approach to developing presort and drop-ship discounts is similar to
the traditional approach. In both, discounts are developed by determining costbased differences between presort and drop ship levels, and then passing
through an amount that is calculated by multiplying the cost differences by
selected passthroughs. In other words, within the “branches,” the new approach
is not much different from its predecessor.
b.
Please see the worksheets labeled “Presort Tree” in each of the Excel workbooks,
WP-STDREG-0621-POIR5-Resp and WP-STDECR-0621-POIR5-Resp, which are
provided in USPS- LR-L-148. In responding to this question, I adopted a modified
RESPONSE OF U.S. POSTAL SERVICE WITNESS KIEFER (USPS-T-36) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, QUESTION 3
version of the Attachment 2 “presort tree” model. I rearranged the “branches” so
that the most expensive category, Nonmachinable Parcels, appears at the left and
lower-priced (or more highly discounted) categories are to the right and down the
sheet. I also included the Non Flat-Machinable (NFM), or “hybrid” piece, rate
category in the Standard Mail Regular tree. Putting NFMs into the tree
necessitated establishing a second level (or “third dimension”) to the tree. I added
this additional level (and one for automation flats) because a strictly linear
progression of rate categories across the worksheet seemed to compel calculating
“passthroughs” of questionable value, such as “passthroughs” between NFMs and
Nonautomation Flats, or between Automation Flats and Nonmachinable Letters.
The ECR tree generally has the same structure as the Regular tree, although it is
much simpler and has all relationships on one level.
c.
Please see my WP-STDREG-26 (“Proposed Rates”) in USPS-LR-L-36. In line 10
of that sheet, an automation rate differential is proposed for letters (cell D10) and
flats (cell F10). If one compares the formulas for the base automation letter (cell
H27) and the base nonautomation machinable letter (cell H33), one can see that
the formulas are essentially the same, except for the subtraction of the proposed
automation differential from the automation letter rate. One can also verify that this
is the result by comparing the rates in the two cells (H27 and H33). They differ by
the amount of the proposed automation differential.
The same is true for automation and nonautomation flats. In that case, the
appropriate cells to compare are the per-piece rate elements for the base
automation and nonautomation flats (both have the same per-pound rate element).
These rates (and their underlying formulas) are in the cells M53 and M59.
Although the methodology I used differed from the passthrough approach
mentioned in the question, inspection of WP-STDREG-26 shows that the
RESPONSE OF U.S. POSTAL SERVICE WITNESS KIEFER (USPS-T-36) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, QUESTION 3
automation rates are developed by subtracting the proposed automation
differentials from the relevant nonautomation rate elements.
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER'S INFORMATION REQUEST (POIR) NO. 5, Question 4
4.
The instant proposal incorporates changes in the methodology used to estimate
Standard Regular mail worksharing-related cost avoidances from the
methodology approved by the Commission in Docket No. R2000-1 when these
issues were last fully litigated. The changes include, but are not limited to:
•
the use of a single CRA-derived mail processing unit cost estimate for
presort letters and flats;
•
the elimination of the distinction between worksharing-related fixed and
nonworksharing-related fixed cost pools; and
•
the absence of rate category-specific unit delivery costs, estimated using
the DPS percentages from the engineering models.
In order for the Commission and the participants to understand the impact that
these proposed methodological changes would have on estimates of avoided
costs, please provide a complete set of cost avoidances for Standard Regular
mail based on the methodology incorporated in USPS-LR-K-102 and 110 in
Docket No. R2005-1, including all underlying calculations. Also calculate the
resulting passthroughs implied by the proposed rates. Please make reasonable
assumptions as necessary, and provide explanations for any assumptions made.
RESPONSE:
Cost Avoidances
In order to develop the cards / letters cost avoidance estimates, it is first
necessary to calculate the delivery unit cost estimates by rate category and estimate
separate nonautomation and automation mail processing unit costs by shape. These
data are contained in USPS-LR-L-147. As stated in the response to Presiding Officer's
Information Request (POIR) No. 1, question 1(a) in Docket No. R2005-1, the Postal
Service does not feel that the In Office Cost System (IOCS) can be used to accurately
estimate separate mail processing unit costs by shape for nonautomation presort cards
and letters and automation presort cards and letters. As an alternative in the instant
proceeding, the Postal Service has relied on only one mail processing unit cost by
shape estimate (nonautomation and automation combined) for both cards and letters.
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER'S INFORMATION REQUEST (POIR) NO. 5, Question 4
This is discussed at length below. The revised cards/letters cost models are contained
in USPS-LR-L-141 and rely on the Docket No. R2005-1 methodology.
The revised flats cost models are contained in USPS-LR-L-142. The flats cost
models from Docket No. R2005-1 (USPS-LR-K-102) were based on a single CRAderived mail processing unit cost estimate, not multiple CRA-derived mail processing
unit cost estimates as the question implies. The only change that has been made to the
cost models, when compared to the most recent version of USPS-LR-L-102 filed on
6/28/06, is that three cost pool classifications are used: worksharing related
proportional, worksharing related fixed, and non-worksharing related fixed. This change
has no impact on the mail processing unit cost estimates by rate category. Although it
has not been requested in either question 4 or 5 of this POIR, the cost model for
Periodicals Outside County flats has also been provided in USPS-LR-L-142.
The CRA-derived automation and nonautomation costs are being provided in
response to Questions 4 and 5 of POIR 5, as requested, but the Commission should be
aware of problems with such costs. In the PRC costs provided with the filing, we do not
provide the CRA-derived automation and non-automation letter costs for this docket
because we did not believe there was an accurate way of distinguishing auto costs from
non-auto costs. This was foreshadowed in Docket No. R2005-1 in Witness
Abdirahman’s response to POIR no. 1, Part A where he indicated the presence of flaws
in the methods used to obtain CRA-derived automation and non-automation rate letter
costs and suggested a possible alternative approach as meriting exploration. His
response described the flaw in the CRA-based methods as: “Based solely on the
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER'S INFORMATION REQUEST (POIR) NO. 5, Question 4
physical examination of mail piece characteristics (e.g., barcodes), it is not always
possible for data collectors to determine whether the revenue of a given mail piece, and
the piece itself, was recorded at the nonautomation rates or automation rates.”This
observation suggested the significant likelihood for inaccurate determination of
automation and non-automation costs based on IOCS data.
In this docket, Witnesses Abdirahman, USPS-T-22 (pages 5-6), and Smith,
USPS-T-13 (pages 35-36) indicate that the Postal Service has concluded that the mail
piece markings are not sufficient to allow IOCS data collectors to accurately identify
automation and non-automation rate pieces, and thus IOCS can not be used as a basis
for separate CRA-derived costs. Below, we are providing further explanation of the
reasons for this conclusion that the previous use of IOCS to obtain separate CRA based
automation and non-automation costs was not valid.
Under current mail preparation standards, a letter mailing can qualify for
automation rates even if, during acceptance and verification, it is determined that less
than 100 percent of the mail pieces have legitimate 11-digit barcodes. Verification
procedures will allow up to a 10% tolerance on the 11-digit barcodes for mailings
claiming the automation rates before the Postal Service applies an additional postage
factor. If the tests on the automation pieces indicate that 90% or more have legitimate
11-digit barcodes, the mailing is allowed the auto rate. For error rates above 10%, the
auto rates are either adjusted based on the actual error rate or the mailing is not eligible
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER'S INFORMATION REQUEST (POIR) NO. 5, Question 4
for the auto rates at all, depending on the percent of barcodes that are not acceptable.1
In principle, up to 10 percent of letters accepted at the automation presort letter rates
may therefore have 9-digit barcodes, 5-digit barcodes, or no barcodes at all. Classifying
mail pieces (for IOCS tallies) as automation presort letters based solely on the presence
of a specific barcode may therefore not be valid.2
Identifying non-automation presort letters purely on the basis of the barcode
present also is problematic. If a given automation mailing fails to meet the standard
described above at the time of acceptance, the mailer may choose to be assessed the
non-automation presort letters rate, rather than rework the mail. This means that some
non-automation presort letters mailings could contain a significant number of mail
pieces with legitimate 11-digit barcodes and appear to have qualified for automation
rates. As a result, it is not always possible for IOCS data collectors to determine
whether the piece was nonautomation rate or an automation rate based solely on the
physical examination of mail piece characteristics (e.g., barcodes, revenue).
1
See the USPS publication Mailers Companion, May/June 2006, page 12. Also see
http://www.usps.com/merlin/appealingmerlin.htm.
2
The mail piece characteristics that lead IOCS data collectors to identify a First-Class
presort letter as Automation rate is as follows. For a letter identified as a First-Class
presort letter, Automation rate is identified in the following possible ways:
1. pieces with “AUTO” markings, MMS codes indicating Automation rate, or
barcodes in the barcode clear zone which are preceded by Axxxxxx to Lxxxxxx
indicating Automation rate.
2. (If none of the above marking are present) pieces must have an 11-digit Postnet
barcode in address block, or one showing through a window (either in the
address block, or elsewhere) or a barcode in the postage area.
IOCS data for First-Class presort and Standard Regular show a majority of automation
rate tallies do not have the markings indicated in item one above. Thus the presence of
an 11-digit barcode commonly is needed to identify the rate category.
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER'S INFORMATION REQUEST (POIR) NO. 5, Question 4
Thus there is great potential for error, particularly for measuring non-automation
costs and the cost differential with automation costs. In addition, the potential for
erroneously overstating the non-automation letter costs has grown as the nonautomation rate letter share of presort volumes has declined. For instance with the
share of First-Class non-automation rate having declined to 4 percent in FY 2004, the
possible amount of misidentification of Automation rate letters as non-automation rate
looms very large. Erroneously shifting a small percentage of automation costs to nonautomation, raises the latter’s costs a great deal. The error of misidentifying nonautomation rate letters as Automation rate likely has a small offsetting impact. This
could well be behind the rise or could contribute materially to the rise in the nonAutomation rate unit costs that has occurred from FY 1999 to FY 2004 as shown below.
PRC Letter Non-Automation Rate Unit Costs (in Cents/Piece)
And Non-Automation Rate Volume Shares of Presort Letters
First-Class
Standard Regular
FY
Unit
Cost
Volume
Unit
Cost
Share
Volume
Share
1999
15.35
10%
12.60
18%
2004
22.00
4%
16.90
7%
See Docket No. R2000-1, USPS LR-I-466 and Docket No. R2005-1,
USPS LR-K-99.
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER'S INFORMATION REQUEST (POIR) NO. 5, Question 4
Passthroughs
The letter and flat cost avoidances contained in USPS-LR-L-141 and USPS-LR-L-142,
when compared to the proposed prices in USPS-LR-L-36, imply the passthroughs
shown in the attached charts.
Standard Mail Regular POIR4, Question 4 Cost Avoidances
Nonautomation
Flats
Mixed ADC
Cost Avoidance
Cost Avoidance
─────── 0.029 ──────>
Cost Avoidance
─────── 0.254 ──────>
Nonautomation
Machinable
Letters
─────── 0.053 ──────>
Automation
Letters
Mixed ADC
│
│
│
│
0.044
0.048
0.080
0.000
0.010
─────── 0.027 ──────>
↓
↓
ADC
ADC
Mixed AADC
Cost Avoidance
Mixed ADC
↓
↓
─────── 0.174 ──────>
AADC
Mixed AADC
↓
─────── 0.086 ──────>
AADC
│
│
│
│
0.027
0.032
0.019
0.004
↓
3-Digit
Cost Avoidance
Nonmachinable
Letters
│
ADC
Cost Avoidance
Automation
Flats
─────── 0.026 ──────>
↓
↓
↓
3-Digit
3-Digit
3-Digit
│
│
│
│
0.051
0.064
0.083
0.012
↓
5-Digit
Sources:
Letters: Unit cost data from USPS-LR-L-141
Flats: Unit cost data from USPS-LR-L-142
─────── 0.020 ──────>
↓
↓
↓
5-Digit
5-Digit
5-Digit
Standard Mail Regular POIR5, Question 4 Cost Passthroughs
Nonautomation
Flats
Mixed ADC
Passthrough
Passthrough
─────── 138.0% ──────>
Passthrough
─────── 61.5% ──────>
Nonautomation
Machinable
Letters
─────── 75.2% ──────>
Automation
Letters
Mixed ADC
│
│
│
│
68.2%
76.6%
56.5%
NA
96.6%
─────── 172.2% ──────>
↓
↓
ADC
ADC
Mixed AADC
Passthrough
Mixed ADC
↓
↓
─────── 66.6% ──────>
AADC
Mixed AADC
↓
─────── 52.5% ──────>
AADC
│
│
│
│
84.1%
81.1%
42.0%
186.7%
↓
3-Digit
Passthrough
Nonmachinable
Letters
│
ADC
Passthrough
Automation
Flats
─────── 194.2% ──────>
↓
↓
↓
3-Digit
3-Digit
3-Digit
│
│
│
│
69.1%
43.5%
42.3%
134.9%
↓
5-Digit
─────── 214.8% ──────>
↓
↓
↓
5-Digit
5-Digit
5-Digit
Source: Calculation using cost avoidances from Cost Avoidances sheet and proposed rates from USPS-LR-L-36.
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER'S INFORMATION REQUEST (POIR) NO. 5, Question 5
5.
The instant proposal incorporates several major changes in the methodology
used to estimate First-Class Mail worksharing-related cost avoidances from the
methodology incorporated in USPS-LR-K-102 and 110 in Docket No. R2005-1. The
changes include, but are not limited to:
•
the elimination of the Bulk Metered Mail (BMM) benchmark
•
the use of a single CRA-derived mail processing unit cost estimate for
presort letters (as opposed to separate CRA-derived estimates for
nonautomation presort and automation presort)
•
the elimination of the distinction between worksharing-related fixed and
nonworksharing-related fixed cost pools;
•
the absence of an estimated worksharing-related unit cost of 5-digit
(CSBCS/manual) automation presort letters; and
•
the absence of rate category-specific unit delivery costs, estimated using
the DPS percentages from the engineering models.
a.
b.
In order for the Commission and the participants to understand the impact
that these proposed methodological changes would have on estimates of
avoided costs, please provide a complete set of cost avoidances for FirstClass Mail based on the methodology incorporated in USPS-LR-K-102
and 110 in Docket No. R2005-1, including all underlying calculations. Also
calculate the resulting passthroughs implied by the proposed rates.
Please make reasonable assumptions as necessary, and provide
explanations for any assumptions made.
Please refer to USPS-T-22, page 6, lines 10-21. Witness Abdirahman
explains the rationale for eliminating the distinction between worksharingrelated and nonworksharing-related cost pools: “All analysis of
workshare-related activities are constrained within the self-contained CRA
set of costs associated with Presort Letters.” Please confirm that the
distinction between worksharing-related and nonworksharing-related cost
pools is eliminated solely because the use of a single CRA set of costs
makes any such distinction moot in the computation of cost avoidances. If
not confirmed, please identify and fully explain all other rationales.
RESPONSE:
(a)
Cost Avoidances
Please see the response to POIR No. 5, question 4.
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER'S INFORMATION REQUEST (POIR) NO. 5
Passthroughs
As requested, the following two tables provide the estimated passthroughs for FirstClass Mail Automation Letter and Flat shaped pieces based on cost avoidance
estimates provided in Library References LR-L-141 and LR-L-142. The passthrough
for nonautomation letters has not been produced because of the issues with cost
estimates that are discussed elsewhere in the response to this POIR. Also, the
passthroughs for automation flat shaped pieces are calculated from the benchmark
of the proposed Mixed ADC presort rate for automation flats. In the past dockets
going back to at least Docket No. R97-1, the automation flat presort rates were
proposed by the Postal Service and recommended by the Commission to maintain
the rate relationships between automation letter and flat shaped pieces. Mail
processing and delivery cost avoidance for flat shaped pieces were developed but
not directly used to derive the automation flat presort rates. The following excerpt
from Docket R2000-1 Opionion and Recommended Decision highlights this point.
[5099] Witness Fronk states that bulk automation flats rates are
designed to preserve the appropriate rate relationships between
automated letters and flats, and between the automation flats and the
non-automation presort rate that applies to both letters and flats. With
the proposed rates, barcoded flats pay less postage than nonautomation presort flats, and more postage than barcoded letters at all
automation tiers. In his testimony, witness Fronk demonstrates the
consistent rate relationships for two-ounce letters and flats. He states
that the rate proposal is consistent with the ratemaking criterion of
simple, identifiable relationships among rates. Opinion and
Recommended Decision, Docket No. R2000-1, pages 244 and 245.
footnote omitted.
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER'S INFORMATION REQUEST (POIR) NO. 5
Automation Letters
Mail Processing
Delivery
Total
Worksharing
Related Unit
Costs
Worksharing
Related Unit
Costs
0.114
0.054
0.040
0.042
0.155
0.096
0.044
0.040
0.028
0.040
0.040
0.037
0.084
0.080
0.065
Worksharing
Related Unit
Costs
BMM Letters
Mixed AADC
Letters
AADC Letters
3-Digit Letters
5-Digit Letters
Unit
Cost
Savings
Proposed
Rates
Discounts
Passthroughs
0.058
0.420
0.346
0.074
128%
0.012
0.004
0.015
0.335
0.331
0.312
0.011
0.004
0.019
92%
100%
127%
Proposed
Rates
Discounts
Passthroughs
0.032
0.010
0.025
36%
17%
34%
Automation Flats
Mail Processing
Worksharing
Related Unit
Costs
Mixed ADC Flats
ADC Flats
3-Digit Flats
5-Digit Flats
0.417
0.329
0.269
0.195
Delivery
Total
Worksharing
Related Unit
Costs
Worksharing
Related Unit
Costs
Unit
Cost
Savings
0.116
0.116
0.116
0.116
0.533
0.445
0.385
0.312
0.088
0.060
0.074
0.465
0.433
0.423
0.398
Note:
Mail Processing and Delivery Cost for letter shaped pieces - PRC LR-141
Mail Processing Costs for flat shaped pieces - PRC LR-142
Delivery cost for flat shaped pieces do not change due to presort levels, Source:
LR-L-101
(b) Confirmed.
RESPONSE OF UNITED STATES POSTAL SERVICE WITNESS PAUL RIDDLE
TO PRESIDING OFFICER’S INFORMATION REQUEST No. 5 (AS CORRECTED)
POIR5, Q6. This question seeks information on the distribution of mail volumes listed in USPS-LR-L12.
a.
Please provide a table listing the rate category names for the following codes listed in
LOTUS.RURAL.FY2005.FY05MC.DATA.
b.
Please provide a table that assigns a shape category listed in B_Workpapers, file CS10.xls,
worksheet “Inputs DK,” (e.g. DPS, LETTERS, SEC SEG LETTERS, OTHER LETTERS, FLATS
DEL, PARCELS DEL, BOXHLDRS DEL, ACCTBLS DEL, POSTAGE DUE) to the “rate
category codes” listed in question 6.a. Please name those rate categories that do not have a
shape that matches the shapes in question 6.b. as “No Shape Match.”
111, 112, 113, 114, 115, 116, 117, 118, 119, 121, 122, 123, 124, 125, 126, 127, 128, 129, 131,
132, 133, 134, 135, 136, 138, 139, 141, 142, 143, 144, 145, 146, 151, 152, 153, 156, 157, 158,
159, 161, 162, 163, 164, 171, 172, 173, 176, 181, 182, 183, 193, 201, 202, 203, 204, 205, 206,
208, 209, 301, 302, 303, 304, 305, 306, 307, 308, 411, 412, 413, 414, 415, 416, 417, 418, 421,
422, 423, 424, 425, 426, 427, 428, 431, 432, 433, 434, 435, 436, 437, 441, 442, 443, 444, 445,
447, 451, 452, 453, 454, 457, 461, 462, 463, 464, 465, 467, 511, 512, 513, 514, 515, 516, 518,
521, 522, 523, 524, 525, 528, 541, 542, 543, 544, 545, 546, 547, 603, 604, 605, 606, 608, 609,
711, 712, 713, 714, 715, 717, 718, 719, 721, 723, 724, 725, 811, 812, 813, 814, 815, 816, 819,
824, 825, 911, 912, 913, 914, 915, 916, 919, 921, 922, 923, 924, 925, 931, 933, 934, 935, 943,
944, 945, 11A, 11B, 11C, 11D, 11E, 11F, 12E, 13E, 14E, 15D, 15E, 20A, 20B, 20C, 20D, 20E,
20F, 41A, 41D, 41E, 41F, 42D, 42E, 44E, 45E, 51A, 51C, 51D, 51E, 51F, 52A, 52C, 52D, 52E,
52F, 54A, 54D, 54E, 60C, 71B, 71C, 71D, 71E, 81B, 81E, 82B, 82C, 82D, 82E, 91B, 91E, 91F,
92B, 92C, 92E, 92F, 93B, 93C, 93D, 93E, 93F, 94B, 94D, 94E, A01, A03, A04, A05, A09, A0E.
RESPONSE:
Please see POIR5 Q6.xls, attached. Included are all mailcodes and volumes from
LOTUS.RURAL.FY2005.FY05MC., along with their mapping to rate category variable “InputDK Rate
Category” and shape category variable “InputDK Shape Category”, used in B_Workpapers, file
CS10.xls, worksheet “Inputs DK”.
Docket No. R2006-1
Attachment to POIR5, Q6
Page 1 of 5
Vol. (000) Mailcode
3
A0E
68
A01
172
A03
2147
A04
10
A05
13
A09
1070
11A
708
11B
164
11C
222
11D
18242
11E
490
11F
4886183
111
103882
112
1988021
113
641817
114
108948
115
692
116
337
117
5317
118
35975
119
140
12E
1955295
121
50404
122
666102
123
83361
124
2557
125
47
126
4618
127
13
128
243
129
88
13E
8221936
131
136629
132
1845333
133
140504
134
430
135
127
136
192
138
1300
139
18
14E
181541
141
11758
142
100661
143
1519
144
3
145
3
146
3
15D
10
15E
Bucket
55
55
55
55
55
55
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
4
4
Mailcode Description
OTHER DELIVERY CONFIRMATION
OTHER DPS LETTER
OTHER OTHER LETTER
OTHER FLAT
OTHER PARCEL
OTHER CERTIFIED
FIRST CLASS LFP SINGLE PIECE NUMBERED INSURED
FIRST CLASS LFP SINGLE PIECE REGISTERED
FIRST CLASS LFP SINGLE PIECE COD AND CUSTOMS DUE
FIRST CLASS LFP SINGLE PIECE PARCELS PDU
FIRST CLASS LFP SINGLE PIECE DELIVERY CONFIRMATION
FIRST CLASS LFP SINGLE PIECE SIGNATURE CONFIRMATION
FIRST CLASS LFP SINGLE PIECE DPS LETTER
FIRST CLASS LFP SINGLE PIECE SECTOR SEG LETTER
FIRST CLASS LFP SINGLE PIECE OTHER LETTER
FIRST CLASS LFP SINGLE PIECE FLAT
FIRST CLASS LFP SINGLE PIECE PARCEL
FIRST CLASS LFP SINGLE PIECE DIRECT BUNDLE
FIRST CLASS LFP SINGLE PIECE BOXHOLDER
FIRST CLASS LFP SINGLE PIECE PDU EXCL PDU PARCEL
FIRST CLASS LFP SINGLE PIECE CERTIFIED
FIRST CLASS LFP NONAUTO PRESORTED DELIVERY CONFIRMATION
FIRST CLASS LFP NONAUTO PRESORTED DPS LETTER
FIRST CLASS LFP NONAUTO PRESORTED SECTOR SEG LETTER
FIRST CLASS LFP NONAUTO PRESORTED OTHER LETTER
FIRST CLASS LFP NONAUTO PRESORTED FLAT
FIRST CLASS LFP NONAUTO PRESORTED PARCEL
FIRST CLASS LFP NONAUTO PRESORTED DIRECT BUNDLE
FIRST CLASS LFP NONAUTO PRESORTED BOXHOLDER
FIRST CLASS LFP NONAUTO PRESORTED PDU EXCL PDU PARCEL
FIRST CLASS LFP NONAUTO PRESORTED CERTIFIED
FIRST CLASS LFP AUTOMATION NONCARRIER DELIVERY CONFIRM
FIRST CLASS LFP AUTOMATION NONCARRIER DPS LETTER
FIRST CLASS LFP AUTOMATION NONCARRIER SECTOR SEG LETTER
FIRST CLASS LFP AUTOMATION NONCARRIER OTHER LETTER
FIRST CLASS LFP AUTOMATION NONCARRIER FLAT
FIRST CLASS LFP AUTOMATION NONCARRIER PARCEL
FIRST CLASS LFP AUTOMATION NONCARRIER DIRECT BUNDLE
FIRST CLASS LFP AUTOMATION NONCARRIER PDU EXCL PDU PARCE
FIRST CLASS LFP AUTOMATION NONCARRIER CERTIFIED
FIRST CLASS LFP AUTOMATION CARRIER DELIVERY CONFIRMATION
FIRST CLASS LFP AUTOMATION CARRIER DPS LETTER
FIRST CLASS LFP AUTOMATION CARRIER SECTOR SEG LETTER
FIRST CLASS LFP AUTOMATION CARRIER OTHER LETTER
FIRST CLASS LFP AUTOMATION CARRIER FLAT
FIRST CLASS LFP AUTOMATION CARRIER PARCEL
FIRST CLASS LFP AUTOMATION CARRIER DIRECT BUNDLE
FIRST CLASS POST CARD SINGLE PIECE PARCELS PDU
FIRST CLASS POST CARD SINGLE PIECE DELIVERY CONFIRMATION
InputsDK Rate Category
Other
Other
Other
Other
Other
Certified
Insured
Registered
First Class Single Piece
First Class Single Piece
First Class Single Piece
Other
First Class Single Piece
First Class Single Piece
First Class Single Piece
First Class Single Piece
First Class Single Piece
First Class Single Piece
First Class Single Piece
First Class Single Piece
Certified
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Presort
Certified
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Presort
Certified
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Presort
First Class Single Piece Card
First Class Single Piece Card
InputsDK Shape Category
No Shape Match
No Shape Match
No Shape Match
No Shape Match
No Shape Match
Acctbls Del
Acctbls Del
Acctbls Del
No Shape Match
Parcels Del & Postage Due
Parcels Del
Acctbls Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Parcels Del
Boxhldrs Del
Postage Due
Acctbls Del
Parcels Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Parcels Del
Boxhldrs Del
Postage Due
Acctbls Del
Parcels Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Parcels Del
Postage Due
Acctbls Del
Parcels Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Parcels Del
Parcels Del & Postage Due
Parcels Del
Docket No. R2006-1
Attachment to POIR5, Q6
Page 2 of 5
Vol. (000) Mailcode
405995
151
8622
152
311262
153
27
156
2432
157
301
158
17
159
121183
161
2366
162
82582
163
17
164
392491
171
7695
172
107930
173
7
176
17239
181
252
182
13011
183
34
193
4011
20A
105
20B
109
20C
85
20D
48906
20E
786
20F
1648
201
34
202
2673
203
43569
204
82452
205
38
206
47
208
517
209
15602
301
1890
302
99723
303
2721016
304
4978
305
457
306
5959
307
3
308
17
41A
47
41D
13666
41E
7
41F
1804072
411
38326
412
889129
413
672400
414
171495
415
121
416
248218
417
177
418
Bucket
4
4
4
4
4
4
4
5
5
5
5
5
5
5
5
5
5
5
9
7
7
7
7
7
7
7
7
7
7
7
7
7
7
10
10
10
10
10
10
10
10
15
15
15
15
15
15
15
15
15
15
15
15
Mailcode Description
FIRST CLASS POST CARD SINGLE PIECE DPS LETTER
FIRST CLASS POST CARD SINGLE PIECE CARRI SECT SEG LETTER
FIRST CLASS POST CARD SINGLE PIECE OTHER LETTER
FIRST CLASS POST CARD SINGLE PIECE DIRECT BUNDLE
FIRST CLASS POST CARD SINGLE PIECE BOXHOLDER
FIRST CLASS POST CARD SINGLE PIECE PDU EXCL PDU PARCEL
FIRST CLASS POST CARD SINGLE PIECE CERTIFIED
FIRST CLASS POST CARD NONAUTO PRESORT DPS LETTER
FIRST CLASS POST CARD NONAUTO PRESORT SECTOR SEG LETTER
FIRST CLASS POST CARD NONAUTO PRESORT OTHER LETTER
FIRST CLASS POST CARD NONAUTO PRESORT FLAT
FIRST CLASS POST CARD AUTO NONCARRIER DPS LETTER
FIRST CLASS POST CARD AUTO NONCARRIER SECTOR SEG LETTER
FIRST CLASS POST CARD AUTO NONCARRIER OTHER LETTER
FIRST CLASS POST CARD AUTO NONCARRIER DIRECT BUNDLE
FIRST CLASS POST CARD AUTO CARRIER DPS LETTER
FIRST CLASS POST CARD AUTO CARRIER SECTOR SEG LETTER
FIRST CLASS POST CARD AUTO CARRIER OTHER LETTER
FIRST CLASS MAILGRAM OTHER LETTER
PRIORITY NUMBERED INSURED
PRIORITY REGISTERED
PRIORITY COD AND CUSTOMS DUE
PRIORITY PARCELS PDU
PRIORITY DELIVERY CONFIRMATION
PRIORITY SIGNATURE CONFIRMATION
PRIORITY DPS LETTER
PRIORITY SECTOR SEG LETTER
PRIORITY OTHER LETTER
PRIORITY FLAT
PRIORITY PARCEL
PRIORITY DIRECT BUNDLE
PRIORITY PDU EXCL PDU PARCEL
PRIORITY CERTIFIED
PERIODICALS DPS LETTER
PERIODICALS SECTOR SEG LETTER
PERIODICALS OTHER LETTER
PERIODICALS FLAT
PERIODICALS PARCEL
PERIODICALS DIRECT BUNDLE
PERIODICALS BOXHOLDER
PERIODICALS PDU EXCL PDU PARCEL
STD REGULAR PRESORT NONAUTOMATION NUMBERED INSURED
STD REGULAR PRESORT NONAUTOMATION PARCELS PDU
STD REGULAR PRESORT NONAUTOMATION DELIVERY CONFIRMATION
STD REGULAR PRESORT NONAUTOMATION SIGNATURE CONFIRMATIO
STD REGULAR PRESORT NONAUTOMATION DPS LETTER
STD REGULAR PRESORT NONAUTOMATION SECTOR SEG LETTER
STD REGULAR PRESORT NONAUTOMATION OTHER LETTER
STD REGULAR PRESORT NONAUTOMATION FLAT
STD REGULAR PRESORT NONAUTOMATION PARCEL
STD REGULAR PRESORT NONAUTOMATION DIRECT BUNDLE
STD REGULAR PRESORT NONAUTOMATION BOXHOLDER
STD REGULAR PRESORT NONAUTOMATION PDU EXCL PDU PARCEL
InputsDK Rate Category
First Class Single Piece Card
First Class Single Piece Card
First Class Single Piece Card
First Class Single Piece Card
First Class Single Piece Card
First Class Single Piece Card
Certified
First Class Presort Card
First Class Presort Card
First Class Presort Card
First Class Presort Card
First Class Presort Card
First Class Presort Card
First Class Presort Card
First Class Presort Card
First Class Presort Card
First Class Presort Card
First Class Presort Card
Mailgram
Insured
Registered
Priority Mail
Priority Mail
Priority Mail
Other
Priority Mail
Priority Mail
Priority Mail
Priority Mail
Priority Mail
Priority Mail
Priority Mail
Certified
Periodicals
Periodicals
Periodicals
Periodicals
Periodicals
Periodicals
Periodicals
Periodicals
Insured
Presorted Standard Regular Other
Presorted Standard Regular Other
Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
InputsDK Shape Category
DPS Letters
Sec Seg Letters
Other Letters
Parcels Del
Boxhldrs Del
Postage Due
Acctbls Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
DPS Letters
Sec Seg Letters
Other Letters
Parcels Del
DPS Letters
Sec Seg Letters
Other Letters
Other Letters
Acctbls Del
Acctbls Del
No Shape Match
Parcels Del & Postage Due
Parcels Del
Acctbls Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Parcels Del
Postage Due
Acctbls Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Parcels Del
Boxhldrs Del
Postage Due
Acctbls Del
Parcels Del & Postage Due
Parcels Del
Acctbls Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Parcels Del
Boxhldrs Del
Postage Due
Docket No. R2006-1
Attachment to POIR5, Q6
Page 3 of 5
Vol. (000) Mailcode
3
42D
586
42E
8412162
421
128540
422
2205108
423
3110182
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14744
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90
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177954
431
7735
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401528
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4394956
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16694
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79321
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65763
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442087
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28742
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1239285
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1518533
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1636522
467
1085
51A
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51D
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37
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1301
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42340
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34
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3
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136
52A
7
52C
51
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8982
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17
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70
521
17
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30
523
Bucket
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24
24
24
24
Mailcode Description
STD REGULAR AUTOMATION PARCELS PDU
STD REGULAR AUTOMATION DELIVERY CONFIRMATION
STD REGULAR AUTOMATION DPS LETTER
STD REGULAR AUTOMATION SECTOR SEG LETTER
STD REGULAR AUTOMATION OTHER LETTER
STD REGULAR AUTOMATION FLAT
STD REGULAR AUTOMATION PARCEL
STD REGULAR AUTOMATION DIRECT BUNDLE
STD REGULAR AUTOMATION BOXHOLDER
STD REGULAR AUTOMATION PDU EXCL PDU PARCEL
STD REGULAR ECR BASIC DPS LETTER
STD REGULAR ECR BASIC SECTOR SEG LETTER
STD REGULAR ECR BASIC OTHER LETTER
STD REGULAR ECR BASIC FLAT
STD REGULAR ECR BASIC PARCEL
STD REGULAR ECR BASIC DIRECT BUNDLE
STD REGULAR ECR BASIC BOXHOLDER
STD REGULAR ECR BASIC AUTO DELIVERY CONFIRMATION
STD REGULAR ECR BASIC AUTO DPS LETTER
STD REGULAR ECR BASIC AUTO SECTOR SEG LETTER
STD REGULAR ECR BASIC AUTO OTHER LETTER
STD REGULAR ECR BASIC AUTO FLAT
STD REGULAR ECR BASIC AUTO PARCEL
STD REGULAR ECR BASIC AUTO BOXHOLDER
STD REGULAR ECR HIGH DENSITY DELIVERY CONFIRMATION
STD REGULAR ECR HIGH DENSITY DPS LETTER
STD REGULAR ECR HIGH DENSITY SECTOR SEG LETTER
STD REGULAR ECR HIGH DENSITY OTHER LETTER
STD REGULAR ECR HIGH DENSITY FLAT
STD REGULAR ECR HIGH DENSITY BOXHOLDER
STD REGULAR ECR SATURATION DPS LETTER
STD REGULAR ECR SATURATION SECTOR SEG LETTER
STD REGULAR ECR SATURATION OTHER LETTER
STD REGULAR ECR SATURATION FLAT
STD REGULAR ECR SATURATION PARCEL
STD REGULAR ECR SATURATION BOXHOLDER
PKG SVCS PARCEL POST NUMBERED INSURED
PKG SVCS PARCEL POST COD AND CUSTOMS DUE
PKG SVCS PARCEL POST PARCELS DUE
PKG SVCS PARCEL POST DELIVERY CONFIRMATION
PKG SVCS PARCEL POST SIGNATURE CONFIRMATION
PKG SVCS PARCEL POST DPS LETTER
PKG SVCS PARCEL POST SECTOR SEG LETTER
PKG SVCS PARCEL POST OTHER LETTER
PKG SVCS PARCEL POST FLAT
PKG SVCS PARCEL POST PARCEL
PKG SVCS PARCEL POST DIRECT BUNDLE
PKG SVCS PARCEL POST PDU EXCL PDU PARCEL
PKG SVCS MEDIA & LIBRARY NUMBERED INSURED
PKG SVCS MEDIA & LIBRARY COD AND CUSTOMS DUE
PKG SVCS MEDIA & LIBRARY PARCELS PDU
PKG SVCS MEDIA & LIBRARY DELIVERY CONFIRMATION
PKG SVCS MEDIA & LIBRARY SIGNATURE CONFIRMATION
PKG SVCS MEDIA & LIBRARY DPS LETTER
PKG SVCS MEDIA & LIBRARY SECTOR SEG LETTER
PKG SVCS MEDIA & LIBRARY OTHER LETTER
InputsDK Rate Category
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular Other
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Presorted Standard Regular ECR
Insured
Package Services Parcel Post Zone Rate
Package Services Parcel Post Zone Rate
Package Services Parcel Post Zone Rate
Other
Package Services Parcel Post Zone Rate
Package Services Parcel Post Zone Rate
Package Services Parcel Post Zone Rate
Package Services Parcel Post Zone Rate
Package Services Parcel Post Zone Rate
Package Services Parcel Post Zone Rate
Package Services Parcel Post Zone Rate
Insured
Package Services Media & Library Mail
Package Services Media & Library Mail
Package Services Media & Library Mail
Other
Package Services Media & Library Mail
Package Services Media & Library Mail
Package Services Media & Library Mail
InputsDK Shape Category
Parcels Del & Postage Due
Parcels Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Parcels Del
Boxhldrs Del
Postage Due
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Parcels Del
Boxhldrs Del
Parcels Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Boxhldrs Del
Parcels Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Boxhldrs Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Boxhldrs Del
Acctbls Del
No Shape Match
Parcels Del & Postage Due
Parcels Del
Acctbls Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Parcels Del
Postage Due
Acctbls Del
No Shape Match
Parcels Del & Postage Due
Parcels Del
Acctbls Del
DPS Letters
Sec Seg Letters
Other Letters
Docket No. R2006-1
Attachment to POIR5, Q6
Page 4 of 5
Vol. (000) Mailcode
6482
524
26278
525
7
528
3
54A
94
54D
6081
54E
161
541
40
542
660
543
75439
544
67069
545
206
546
6977
547
7
60C
89
603
3298
604
1383
605
10
606
3
608
3
609
31
71B
7
71C
3
71D
174
71E
14807
711
1607
712
28263
713
3930
714
565
715
47791
717
825
718
21
719
2115
721
3037
723
2697
724
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725
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1339
825
1010
91B
75
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7
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26187
911
321
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Bucket
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24
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26
26
8
8
8
8
8
8
8
28
28
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28
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31
31
31
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31
31
31
31
31
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32
32
32
36
36
36
36
36
Mailcode Description
PKG SVCS MEDIA & LIBRARY FLAT
PKG SVCS MEDIA & LIBRARY PARCEL
PKG SVCS MEDIA & LIBRARY PDU EXCL PDU PARCEL
PKG SVCS BPM NUMBERED INSURED
PKG SVCS BPM PARCELS PDUAND COD
PKG SVCS BPM DELIVERY CONFIRMATION
PKG SVCS BPM DPS LETTER
PKG SVCS BPM SECTOR SEG LETTER
PKG SVCS BPM OTHER LETTER
PKG SVCS BPM FLAT
PKG SVCS BPM PARCEL
PKG SVCS BPM DIRECT BUNDLE
PKG SVCS BPM BOXHOLDER
EXPRESS COD AND CUSTOMS DUE
EXPRESS OTHER LETTER
EXPRESS FLAT
EXPRESS PARCEL
EXPRESS DIRECT BUNDLE
EXPRESS PDU EXCL PDU PARCEL
EXPRESS CERTIFIED
USPS/FREE USPS REGISTERED
USPS/FREE USPS COD AND CUSTOMS DUE
USPS/FREE USPS PARCELS PDU
USPS/FREE USPS DELIVERY CONFIRMATION
USPS/FREE USPS DPS LETTER
USPS/FREE USPS SECTOR SEG LETTER
USPS/FREE USPS OTHER LETTER
USPS/FREE USPS FLAT
USPS/FREE USPS PARCEL
USPS/FREE USPS BOXHOLDER
USPS/FREE USPS PDU EXCL PDU PARCEL
USPS/FREE USPS CERTIFIED
USPS/FREE FREE DPS LETTER
USPS/FREE FREE OTHER LETTER
USPS/FREE FREE FLAT
USPS/FREE FREE PARCEL
INTL ECONOMY LETTER POST REGISTERED
INTL ECONOMY LETTER POST DELIVERY CONFIRMATION
INTL ECONOMY LETTER POST DPS LETTER
INTL ECONOMY LETTER POST SECTOR SEG LETTER
INTL ECONOMY LETTER POST OTHER LETTER
INTL ECONOMY LETTER POST FLAT
INTL ECONOMY LETTER POST PARCEL
INTL ECONOMY LETTER POST DIRECT BUNDLE
INTL ECONOMY LETTER POST CERTIFIED
INTL ECONOMY PARCEL POST REGISTERED
INTL ECONOMY PARCEL POST COD AND CUSTOMS DUE
INTL ECONOMY PARCEL POST PARCELS PDU
INTL ECONOMY PARCEL POST DELIVERY CONFIRMATION
INTL ECONOMY PARCEL POST FLAT
INTL ECONOMY PARCEL POST PARCEL
INTL AIR LETTER POST REGISTERED
INTL AIR LETTER POST DELIVERY CONFIRMATION
INTL AIR LETTER POST SIGNATURE CONFIRMATION
INTL AIR LETTER POST DPS LETTER
INTL AIR LETTER POST SECTOR SEG LETTER
InputsDK Rate Category
Package Services Media & Library Mail
Package Services Media & Library Mail
Package Services Media & Library Mail
Insured
Package Services Bound Printed Matter
Package Services Bound Printed Matter
Package Services Bound Printed Matter
Package Services Bound Printed Matter
Package Services Bound Printed Matter
Package Services Bound Printed Matter
Package Services Bound Printed Matter
Package Services Bound Printed Matter
Package Services Bound Printed Matter
Express Mail
Express Mail
Express Mail
Express Mail
Express Mail
Express Mail
Certified
United States Postal Service
United States Postal Service
United States Postal Service
United States Postal Service
United States Postal Service
United States Postal Service
United States Postal Service
United States Postal Service
United States Postal Service
United States Postal Service
United States Postal Service
Certified
Free Mail
Free Mail
Free Mail
Free Mail
International
International
International
International
International
International
International
International
Certified
International
International
International
International
International
International
International
International
International
International
International
InputsDK Shape Category
Flats Del
Parcels Del
Postage Due
Acctbls Del
Parcels Del & Postage Due
Parcels Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Parcels Del
Boxhldrs Del
No Shape Match
Acctbls Del
Acctbls Del
Acctbls Del
Acctbls Del
Acctbls Del
Acctbls Del
Acctbls Del
No Shape Match
Parcels Del & Postage Due
Parcels Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Boxhldrs Del
Postage Due
Acctbls Del
DPS Letters
Other Letters
Flats Del
Parcels Del
Acctbls Del
Parcels Del
DPS Letters
Sec Seg Letters
Other Letters
Flats Del
Parcels Del
Parcels Del
Acctbls Del
Acctbls Del
No Shape Match
Parcels Del & Postage Due
Acctbls Del
Acctbls Del
Acctbls Del
Acctbls Del
Parcels Del
Acctbls Del
DPS Letters
Sec Seg Letters
Docket No. R2006-1
Attachment to POIR5, Q6
Page 5 of 5
Vol. (000) Mailcode
15404
913
8019
914
2413
915
3
916
10
919
266
92B
3
92C
231
92E
7
92F
3
921
10
922
66
923
140
924
3018
925
88
93B
3
93C
3
93D
308
93E
3
93F
38
931
157
933
290
934
524
935
7
94B
3
94D
37
94E
7
943
61
944
177
945
Bucket
36
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36
36
36
37
37
37
37
37
37
37
37
37
38
38
38
38
38
38
38
38
38
39
39
39
39
39
39
Mailcode Description
INTL AIR LETTER POST OTHER LETTER
INTL AIR LETTER POST FLAT
INTL AIR LETTER POST PARCEL
INTL AIR LETTER POST DIRECT BUNDLE
INTL AIR LETTER POST CERTIFIED
INTL AIR PARCEL POST REGISTERED
INTL AIR PARCEL POST COD AND CUSTOMS DUE
INTL AIR PARCEL POST DELIVERY CONFIRMATION
INTL AIR PARCEL POST SIGNATURE CONFIRMATION
INTL AIR PARCEL POST DPS LETTER
INTL AIR PARCEL POST SECTOR SEG LETTER
INTL AIR PARCEL POST OTHER LETTER
INTL AIR PARCEL POST FLAT
INTL AIR PARCEL POST PARCEL
INTL AIR EXPRE PRIOR REGISTERED
INTL AIR EXPRE PRIOR COD AND CUSTOMS DUE
INTL AIR EXPRE PRIOR PARCELS PDU
INTL AIR EXPRE PRIOR DELIVERY CONFIRMATION
INTL AIR EXPRE PRIOR SIGNATURE CONFIRMATION
INTL AIR EXPRE PRIOR DPS LETTER
INTL AIR EXPRE PRIOR OTHER LETTER
INTL AIR EXPRE PRIOR FLAT
INTL AIR EXPRE PRIOR PARCEL
INTL AIR EXPRESS REGISTERED
INTL AIR EXPRESS PARCELS PDU
INTL AIR EXPRESS DELIVERY CONFIRMATION
INTL AIR EXPRESS OTHER LETTER
INTL AIR EXPRESS FLAT
INTL AIR EXPRESS PARCEL
InputsDK Rate Category
International
International
International
International
Certified
International
International
International
International
International
International
International
International
International
International
International
International
International
International
International
International
International
International
International
International
International
International
International
International
InputsDK Shape Category
Other Letters
Flats Del
Parcels Del
Parcels Del
Acctbls Del
Acctbls Del
No Shape Match
Acctbls Del
Acctbls Del
Acctbls Del
Acctbls Del
Acctbls Del
Acctbls Del
Acctbls Del
Acctbls Del
No Shape Match
Parcels Del & Postage Due
Parcels Del
Acctbls Del
DPS Letters
Other Letters
Flats Del
Parcels Del
Acctbls Del
Postage Due
Parcels Del
Other Letters
Flats Del
Parcels Del
Docket No. R2006-1
RESPONSE OF UNITED STATES POSTAL SERVICE WITNESS PAUL RIDDLE
TO PRESIDING OFFICER’S INFORMATION REQUEST No. 5 (AS CORRECTED)
POIR5, Q7. Please provide a table, using LOTUS.RURAL.FY2005.FY05MC.DATA, which shows the
mail volume for each of the rate category codes listed in question 6.a. above, by the shape variables
listed in question 6.b. above.
RESPONSE:
Please see the attachment to the response to POIR5 question 6.
Docket No. R2006-1
RESPONSE OF U.S. POSTAL SERVICE WITNESS MILANOVIC (USPS-T-9) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, 8
5.
Please provide a table that matches mail volume for each rate category code by
shape produced in question 6.b. with the mail volume by rate category by shape shown
in B_Workpapers, file CS10.xls, worksheet “Inputs DK.” Please account for any
discrepancies between the shape/rate category volumes listed in B_Workpapers, file
CS10.xls, worksheet “Inputs DK, and LOTUS.RURAL.FY2005.FY05MC.DATA.
RESPONSE
Please see POIR5 Q8 CS10.xls, attached. Volumes by rate category and shape using
data from POIR Q6.xls are formatted to match volumes by rate category and shape as
shown in B-Workpapers, revised CS10.xls -- worksheet “Inputs DK.” Errata to that
worksheet are being filed today.
Response to POIR 5, Question 8
InputsDK Rate_Category
FIRST-CLASS MAIL
First Class Single Piece
First Class Presort
TOTAL LETTERS
First Class Single Piece Card
First Class Presort Card
TOTAL CARDS
TOTAL FIRST-CLASS
PRIORITY MAIL
EXPRESS MAIL
MAILGRAMS
PERIODICALS
STANDARD MAIL
Presorted Standard Regular ECR
Presorted Standard Regular Other
TOTAL STANDARD MAIL
PACKAGE SERVICES
Package Services Parcel Post Zone Rate
Package Services Bound Printed Matter
Package Services Media & Library Mail
TOTAL PACKAGE SERVICES
US POSTAL SERVICE
FREE MAIL
INTERNATIONAL MAIL
SPECIAL SERVICES
Registered
Certified
Insured
Other
TOTAL SPECIAL SERVICES
TOTAL VOLUME
DPS Letters
4,886,183
10,358,772
15,244,955
405,995
530,913
936,908
16,181,863
1,648
Sec Seg Letters
Other Letters
Flats Del
641,817
225,384
867,201
Parcels Del
103,882
198,790
302,672
8,622
10,314
18,936
321,608
34
1,988,021
2,612,095
4,600,117
311,262
203,523
514,786
5,114,902
2,673
15,602
1,890
34
99,723
2,721,016
5,434
5,959
1,251,254
10,216,234
11,467,489
47,973
166,867
214,839
2,106,524
3,094,237
5,200,761
6,444,941
3,782,583
10,227,524
18,367
236,938
255,304
1,779,865
262,962
2,042,826
96
161
70
327
14,807
2,115
32,165
37
40
17
94
1,607
40
660
30
729
28,263
3,037
18,850
1,301
75,439
6,482
83,223
3,930
2,697
11,415
109,861
73,451
35,311
218,623
743
3,793
3,845
17
17
867,218
43,569
128,104
3,413
131,518
41
7
47
131,565
131,482
Boxhldrs Del
337
4,618
4,955
2,432
2,432
7,386
Acctbls Del
Postage Due
0
0
0
No Shape Match
5,540
205
5,745
304
304
6,049
132
4,784
27,716,016
338
540,410
10,468,973
13,960,591
Page 1
750,789
2,110,940
164
0
164
109
7
3
0
317
317
0
31
244
94
58
397
828
7
41
7
6,514
10
3
6,977
6,977
47,791
164
812
38,101
6,322
1,421
46,657
57,985
0
34
7
7,737
2,401
2,408
2,738
RESPONSE OF POSTAL SERVICE WITNESS KIEFER (USPS-T-37)
TO PRESIDING OFFICER’S INFORMATION REQUEST NO. 5
9.
For Bound Printed Matter, the calculation of the value of leakages is based on
the actual discounts. (See USPS-LR-L-41, workbook “R2006_USPS-LR-L-41_BPM
Spreadsheets.xls,” sheet “Revenue Leakages,” column [E].) This does not seem to be
the case for the other two Package Services, Parcel Post and Media/Library Mail.
a.
USPS-LR-L-82, workbook “WP-ParcelPost.xls,” sheet “Leakages & Surcharges,”
calculates the value of leakages and surcharges in column [C] using the unit cost
savings form the “inputs” sheet rather than the actual proposed discounts and
surcharges. Please provide the rationale for using unit savings rather than the
actual proposed discounts and surcharges in the calculation of their value for
Parcel Post. Alternatively, please provide revised workpapers showing the
calculation based on actual discounts and surcharges.
RESPONSE
Please see my response to UPS/USPS-T37-8, subpart (b)(i).
RESPONSE OF UNITED STATES POSTAL SERVICE WITNESS YEH
TO PRESIDING OFFICER’S INFORMATION REQUEST NO. 5
9b USPS-LR-L-41, workbook “R2006_USPS-LR-L-41_Media and Library
Spreadsheets.xls,” sheet “TYBR Per Unit Costs, “ WP-MM-8, calculates the value of
leakage from 5-Digit Presort and Basic Presort in column [C] using cost savings from
the “inputs” sheet rather than the actual proposed discounts. Please provide the
rationale for using unit savings rather than the actual proposed discounts in the
calculation of their value for Media/Library Mail. Alternatively, please provide revised
workpapers showing the calculation based on actual discounts.
RESPONSE
My approach to Media and Library Mail calculation of the value of leakages is consistent
with the Media and Library Mail rate design in R2001-1. Calculating the value of
leakages from 5-Digit Presort and Basic Presort using the cost savings from the “input”
sheet rather than the actual proposed discounts is equivalent to using a 100 percent
passthrough of the cost savings. This method helps reveal how much the passthrough
had to be adjusted in order to obtain the appropriate rate relationships.
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER’S INFORMATION REQUEST (POIR) No. 5
10.
In response to question 3 of POIR 2, the Postal Service states that “[i]n Docket
No. R2006-1, neither the ENCIRCLE program in the PRC version nor the
corresponding portion of the ENCIRCLE program in the USPS version is used.”
Examining the Postal Service version of the mail processing SAS programs
shows that SAS program MOD1POOL in USPS-LR-L-55 utilizes the encirclement
rules. The documentation of USPS-LR-L-55 also references using the
encirclement rules. See Attachment 3.
a.
Please provide the rationale for removing the encirclement rules from the
PRC version, but including them in the USPS version.
b.
Provide a revised PRC version of USPS-LR-L-100 if encirclement rules
should have been included in the PRC version and the deletion of the
encirclement program was an oversight.
RESPONSE
a.
A comparison of the ENCIRCLE programs for both USPS and PRC versions in
Docket No. R2005-1 shows that the encirclement SAS codes in the USPS
version consist of two parts: the first part essentially corresponds to the
ENCIRCLE program in the PRC version, and the second part is used only in the
USPS version and is not included in the PRC version (see the section of the SAS
codes towards the end of the ENCIRCLE.rtf file, starting after the asterisked line
in the attached CD of USPS-LR-K-55, under the SAS Programs directory).
It is both the first part of the USPS ENCIRCLE program and the PRC ENCIRCLE
program in Docket No. R2005-1 which are not used in Docket No. R2006-1 (see
the Postal Service response to POIR No.2, question #3 for the explanation of
why those encirclement rules are not used in the PRC version; the same
explanation applies to the USPS version).
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER’S INFORMATION REQUEST (POIR) No. 5
Only the second part of the USPS ENCIRCLE program filed in Docket No.
R2005-1 makes up the USPS ENCIRCLE program which is used in this Docket
(see the SAS codes in the ENCIRCLE.rtf file in the attached CD of USPS-LR-L55, under the MODS subdirectory of the SAS Programs directory). The SAS
codes in the USPS ENCIRCLE program have been used since Docket No.
R2000-1. They have never been incorporated in the PRC version since the
Commission’s acceptance of these changes cannot be presumed, particularly
when a review of the Commision’s spreadsheets in Docket No. R2001-1
indicates no change. Those SAS codes account for the differences in the
treatment of Special Services between the USPS version and the PRC version
which are reported in this Docket and in Docket No. 2005-1 under Section D.3 of
USPS-T11 in compliance with the Rule 53 requirements.
b.
See the response to a) above. The deletion of the program is not an oversight.
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER’S INFORMATION REQUEST (POIR) No. 11
11.
Please provide a copy of the current version of the Postal Operations Manual
(POM).
RESPONSE
Please see library reference USPS-LR-L-149, Postal Operations Manual, Issue 9.
RESPONSE OF U.S. POSTAL SERVICE WITNESS MILANOVIC (USPS-T-9) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, 12a
12a
Please confirm (if not confirmed, please explain):
a. The Periodical volumes in line 3, “CCS,” are used in the B workpapers’ Cost
Segment 6 and 7 distribution key, which distributes volume variable costs by
shape, to class and subclass.
RESPONSE:
Confirmed that the Periodical volumes shown in line 3, “CCS”, of Table 1, can be found
in B_Workpapers, CS 7. Although VolAdj.USPS.xls is part of USPS-LR-L-67, the CCS
volumes provided by witness Harahush, are used to distribute Cost Segment 7 costs in
the B_Workpapers. The distribution of volume variable costs by shape is a
disaggregation performed in USPS-LR-L-67.
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
1
2
3
4
5
6
7
Volume (000)
RPW
RCS (without boxholder)
CCS
Ratio of RCS to RPW
RCS Adjusted with Boxholder
Ratio of CCS to RPW
CCS Adjusted
8 Delivered Volume
9 Ratio of Delivered to RPW
1
2
3
4
5
6
7
12.
Table 1
A
Letters
159,750
117,215
233,294
0.239
38,224
0.550
87,800
126,023
0.7889
B
Flats
8,908,484
2,721,016
5,211,119
5,387,766
C
Parcels
1,769
5,434
32,035
0.255
452
0.499
883
8,198,714
0.9203
1,335
0.7547
2,810,948
From Workbook "VolAdj.USPS.xls"
=PeriodicalsVolAdj!C9-11
=PeriodicalsVolAdj!G9-11
=PeriodicalsVolAdj!D9-11
=LetterVols!G9
=ParcelVols!I15
=PeriodicalsVolAdj!H9-11+'8.RuralCrosswalk'!G12,K12,N12
=LetterVols!F9
=ParcelVols!H15
=PeriodicalsVolAdj!E9-11
Please confirm (if not confirmed, please explain):
a.
b.
c.
d.
The Periodical volumes in line 3, “CCS,” are used in the B workpapers’ Cost
Segment 6 and 7 distribution key, which distributes volume variable costs by
shape, to class and subclass.
The Periodical volumes in line 7, “CCS Adjusted,” are developed in USPSLR-L-67 and used in conjunction with the Periodical Volumes in line 3
(“CCS”) to redistribute the existing CCS class costs (developed in part a.) by
shape within the class.
The Periodical volumes in line 2, “RCS (without boxholder),” are used in the
B workpapers’ Cost Segment 10 distribution key, which distributes volume
variable costs by shape, to class and subclass.
The Periodical volumes in line 5, “RCS Adjusted with Boxholder” are
developed in USPS-LR-L-67 and used in conjunction with the Periodical
Volumes in line 2 (“RCS”) to redistribute the existing RCS class costs
(developed in part b.) by shape within the class.
Response
I am assuming that this question refers to information in Table 1.
b. Confirmed.
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
d. Confirmed.
RESPONSE OF U.S. POSTAL SERVICE WITNESS MILANOVIC (USPS-T-9) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, 12c
12.
Please confirm (if not confirmed, please explain):
c. The Periodical volumes in line 2, “RCS (without boxholder),” are used in the
B workpapers’ Cost Segment 10 distribution key, which distributes volume
variable costs by shape, to class and subclass.
RESPONSE:
Confirmed that the Periodical volumes shown in line 2, “RCS(without boxholder)”, of
Table 1, can be found in B_Workpapers, CS 10. Although VolAdj.USPS.xls is part of
USPS-LR-L-67, the RCS volumes provided by witness Riddle, both with and without
boxholder volumes, are used to distribute Cost Segment 10 costs in the B_Workpapers.
The distribution of volume variable costs by shape is a disaggregation performed in
USPS-LR-L-67.
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
13.
Please confirm (if not confirmed, please explain):
a.
b.
c.
d.
e.
f.
The ratio of RCS to RPW Letters, where the volumes in the numerator and
the denominator are the sum of piece volumes for “Total First-Class Single
Piece, Priority, Standard, and Free/US Postal Service” (as measured by the
RCS and RPW, respectively), is used to develop “RCS Adjusted” Letter
Volume by multiplying this ratio by the RPW Periodical Letter Volume.
The ratio of CCS to RPW Letters, where the volumes in the numerator and
the denominator are the sum of piece volumes for “Total First-Class Single
Piece, Priority, Standard, and Free/US Postal Service” (as measured by the
CCS and RPW, respectively), is used to develop “CCS Adjusted” Letter
Volume by multiplying this ratio by the RPW Periodical Letter Volume.
The ratio of RCS to RPW Parcels, where the volumes in the numerator and
the denominator are the sum of piece volumes for “Total First-Class Single
Piece, Priority, Post-Crosswalk Standard Regular, Bound Printed Matter,
Zone Rate Parcels, Media Mail, and Free/US Postal Service Mail” (as
measured by the RCS and RPW, respectively), is used to develop “RCS
Adjusted” Parcel Volume by multiplying this ratio by the RPW Parcel Volume.
The ratio of CCS to RPW Parcels, where the volumes in the numerator and
the denominator are the sum of piece volumes for “Total First-Class Single
Piece, Priority, Post-Crosswalk Standard Regular, Bound Printed Matter,
Zone Rate Parcels, Media Mail, and Free/US Postal Service Mail” (as
measured by the CCS and RPW, respectively), is used to develop “CCS
Adjusted” Parcel Volume by multiplying this ratio by the RPW Parcel Volume.
The difference in volume between cells A3 and A7 is shifted from Letters to
Flats. The difference in volume between cells A2 and A5 is shifted from
Letters to Flats.
The difference in volume between cells C3 and C7 is shifted from Parcels to
Flats. The difference in volume between cells C2 and C5 is shifted from
Parcels to Flats.
Response
I am assuming that this question relates to Table 1 provided with the POIR,
which for purposes of this POIR response is attached to my response to item 12.
a. Confirmed.
b. Confirmed.
c. Confirmed.
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
d. Confirmed.
e. Not confirmed. The difference in volume between cells A3 and A7 represents
the city volume that is shifted from letters to flats. However, the difference between
A2 and A5 does not represent the rural volume shift from letters to flats. Row 5 in
the table includes boxholder volume which is distributed to shape in the same
proportion as originating volume. For Periodical letters, 105 of the total Periodical
boxholder volume from RCCS is distributed to Periodical letters. Subtracting 105
from the figure in the table, 38,224, equals 38,119. The amount of Periodical
volume shifted from letters to flats is found by subtracting 38,119 from 117,215
which equals 79,097. That figure is contained in cell I9 of worksheet
VolAdj.USPS.xls in USPS-LR-L-67.
f. Not confirmed. The difference in volume between cells C3 and C7 represents the
city volume that is shifted from parcels to flats. However, the difference between C2
and C5 does not represent the rural volume shift from parcels to flats. Row 5 in the
table includes boxholder volume which is distributed to shape in the same
proportion as originating volume. For Periodical parcels, 1 of the total Periodical
boxholder volume from RCCS is distributed to Periodical parcels. Subtracting that
amount from the figure in the table, 452, equals 451. The amount of Periodical
volume shifted from parcels to flats is found by subtracting 451 from which equals
4,983. That figure is contained in cell I11 of worksheet VolAdj.USPS.xls in USPSLR-L-67.
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
14. When developing the RCS/RPW and CCS/RPW ratios, please explain the
rationale for including or excluding the volumes of each subclass. Please focus the
response on the shared characteristics (e.g., the percentage of mail delivered)
between the included volumes and Periodicals.
Response
I am assuming that this question relates to Table 1 provided with the POIR,
which for purposes of this POIR response is attached to my response to item 12.
The ratios in rows four and six of column A in Table 1 that were used to determine
the magnitude of the Periodical volume shift from letters to flats were derived by taking the
average ratio of delivered letters, separately by carrier system, to originating letters across
several subclasses of mail. However, due to the magnitude of the volumes of the
subclasses considered, the ratio was, essentially, a weighted average of the ratio of
delivered volume to originating volume for Standard Mail and First Class Single Piece, with
Standard Mail bearing a heavier influence on the ratio due to its greater volume. My belief
is that the delivery characteristics of Standard letters are a better proxy for Periodical
letters than First Class Single Piece letters, but absent specific data on the issue, I was not
comfortable using only the volume for Standard letters in deriving the ratios in rows four
and six of column A of Table 1.
The ratios in rows four and six of column C in Table 1 that were used to determine
the magnitude of the Periodical volume shift from parcels to flats were derived by taking
the average ratio of delivered parcels, separately by carrier system, to originating parcels
across several subclasses of mail. Since the originating volume of Periodical parcels is so
small with respect to other classes, I found it difficult to compare the delivery
characteristics of Periodical parcels with any specific subclass of mail. Therefore, I
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
thought it would be reasonable to use the average, weighted by subclass volume, of
delivered volume to originating volume.
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
15. Please explain why, using the adjusted volumes found in lines 5 and 7, the ratios
of Delivered Volume to RPW for Letters and Parcels are 13.1% and 16.6% smaller,
respectively, than the ratio for Flats. Please focus on the specific manner in which
these shapes’ characteristics cause this difference.
Response
I am assuming that this question relates to Table 1 provided with the POIR, which
for purposes of this POIR response is attached to my response to item 12.
The ratios in rows four and six of Table 1 that determined the magnitude of the
volume adjustment from Periodical letters to flats and from Periodical parcels to flats were
applied without the constraint of making the post-crosswalked ratios of delivered volume to
originating volume, as shown in row 9 of Table 1, equal across shapes. Given that I had
no specific data addressing this issue, I could find no justification for applying a condition
that would result in equal ratios of delivered volumes to originating volumes in the
subclasses receiving adjustments, such as Periodicals, but not for other subclasses which
did not receive a volume adjustment.
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
16. USPS-T-30 at page 15, beginning at line 6 states that “[S]ince the costs and
volumes are derived from different systems, the possibility exists that the estimated
aggregate volume from CCS, which provides a distribution key for cost segment 7 and
10 costs, exceeds the estimated total originating volume. This is an incongruous result
since it leads to the conclusion that more mail from a specific rate category is delivered
on city and rural routes than was mailed. USPS-LR-L-67 handles this situation by
transferring costs from cost segments 6, 7, and 10 from the rate category with the
anomalous estimated volume to a rate category that does not have this situation. In
practical terms, the volume variable cost segment 6, 7, and 10 costs are generally
transferred from parcels to flats within a particular category of mail…” (Footnote
omitted.)
a.. Please confirm that the statement quoted above is the rationale behind the
shifts of volumes of parcels to flats. If not, please explain fully.
b..If so, please identify the reasons that the RCCS and CCCS surveys cause
this type of discrepancy (e.g., mistaking flats for parcels).
c. Please explain if, and how, the above statement also applies to the letter to
flat volume shift.
d.. If the above statement applies to the letter to flat volume shift, please identify
the reasons that the RCCS and CCCS surveys cause this type of discrepancy (e.g.,
mistaking flats for letters).
e. Would you agree that the ODIS/RPW survey generally produces more
reliable results than the RCCS and CCCS surveys? Please discuss measures
taken to evaluate the reliability of RCCS and CCCS volume estimates when the
delivered volume is not higher than the originating volume (e.g., parcel crosswalk).
Response
a. Confirmed.
c. Yes the above statement applies to letter to flat volume shift. Since the
aggregated estimated Periodical volume of letters from the city and rural carrier systems
exceeded the originating volume, a crosswalk was developed to shift letters to flats.
RESPONSE OF POSTAL SERVICE WITNESS HARAHUSH TO
POIR NO. 5, QUESTIONS 16b, 16d, AND 16e
16. USPS-T-30 at page 15, beginning at line 6 states that “[S]ince the costs and
volumes are derived from different systems, the possibility exists that the estimated
aggregate volume from CCS, which provides a distribution key for cost segment 7 and
10 costs, exceeds the estimated total originating volume. This is an incongruous result
since it leads to the conclusion that more mail from a specific rate category is delivered
on city and rural routes than was mailed. USPS-LR-L-67 handles this situation by
transferring costs from cost segments 6, 7, and 10 from the rate category with the
anomalous estimated volume to a rate category that does not have this situation. In
practical terms, the volume variable cost segment 6, 7, and 10 costs are generally
transferred from parcels to flats within a particular category of mail…” (Footnote
omitted.)
a.
Please confirm that the statement quoted above is the rationale behind the
shifts of volumes of parcels to flats. If not, please explain fully.
b.
If so, please identify the reasons that the RCCS and CCCS surveys cause
this type of discrepancy (e.g., mistaking flats for parcels).
c.
Please explain if, and how, the above statement also applies to the letter to
flat volume shift.
d.
If the above statement applies to the letter to flat volume shift, please identify
the reasons that the RCCS and CCCS surveys cause this type of
discrepancy (e.g., mistaking flats for letters).
e.
Would you agree that the ODIS/RPW survey generally produces more
reliable results than the RCCS and CCCS surveys? Please discuss
measures taken to evaluate the reliability of RCCS and CCCS volume
estimates when the delivered volume is not higher than the originating
volume (e.g., parcel crosswalk).
Response
b. The CCCS and RCCS surveys are statistical surveys and as such they obtain
rate and shape (or compensation category) information from a sample of routes. For
services that have apparent anomalies, the RPW data are obtained from mailing
statements and are reported through the PostalOne system. As such, RCCS and CCCS
data collectors classify mail by rate category and shape according to the markings and
endorsements they see on the mailpieces and how the mailpiece looks at the time of
RESPONSE OF POSTAL SERVICE WITNESS HARAHUSH TO
POIR NO. 5, QUESTIONS 16b, 16d, AND 16e
delivery using defined shape measurement rules, while RPW data come from the mailing
statements entered at the many BMEU’s across the country at the time of mailing.
Examples of situations where a mailpiece can be correctly recorded as a flat in PostalOne
and as a parcel in CCCS and RCCS follow.
For Presorted Standard parcels, it is very important to understand that according to the
regulations in DMM 301.3.4.2, mailpieces between ¾ and 1 ¼ inches thick can pay either
flat or parcel rates. Mailpieces prepared as automation flats pay flat rates and avoid the
parcel surcharge. Those same pieces entered as flats in order to avoid the parcel rate
surcharge would be counted as parcels in CCCS and are likely recorded in the Parcel
Compensation Category in RCCS. So both systems are correctly recording the
mailpieces as they see them when the recording takes place.
For Periodical parcels, it is important to once again understand how data are entered into
the mailing statements and also understand what data collection technicians see at the
time of recording mailpiece information at the carrier case. The Postal Service permits
daily publications to document mailings for the entire month on a single postage statement.
If one or more edition of a publication exceeds ¾ inch in a monthly statement of flat
publications, it would show as a flat on the mailing statement but would be recorded as a
parcel by the data collectors at the case because its width exceeds ¾ inch.
RESPONSE OF POSTAL SERVICE WITNESS HARAHUSH TO
POIR NO. 5, QUESTIONS 16b, 16d, AND 16e
There are other instances where Periodicals may show as flats on mailing statements and
parcels in the data systems. For example, if a large but less than ¾ inch flat is rolled prior
to its receipt by the carrier so the carrier can handle the mailpiece more easily and
efficiently, the flat would be counted as a parcel in the carrier systems because it is thicker
than ¾ inch. Furthermore, if a Periodical flat is on the top of a direct bundle given to a
rural carrier, the data collector will record the bundle as a Periodical parcel, using the toppiece rule. Similarly in RCCS, rigid flats (including properly prepared “do not bend”
mailpieces) that exceed five inches in height are recorded in the Parcel Compensation
Category as well as other mailpieces that cannot fit in the case separation with other mail.
In the CCCS, if a large Periodical flat is in the parcel hamper, a data collector will record
that piece as a parcel when the carrier is using a two case system.
Certainly, human error is possible, whether it be at the carrier case or at the BMEU.
However, it must be noted that none of the noted differences constitute more than a minor
percentage of the total volume involved. Of the four rate category/shape classifications,
some are extremely small categories of mail. A very small error in classification from
major shape (flat) to one of the minor shapes (parcels) would be magnified in the small
shape estimate. But by no means does the minor classification error even indicate that
there is a systematic data collection problem.
d. The CCCS and RCCS surveys are statistical surveys and as such they obtain
rate and shape (or compensation category) information from a sample of routes. RPW
RESPONSE OF POSTAL SERVICE WITNESS HARAHUSH TO
POIR NO. 5, QUESTIONS 16b, 16d, AND 16e
data are obtained from mailing statements and are reported through the PostalOne
system. As such, RCCS and CCCS data collectors classify mail by rate category and
shape according to the markings and endorsements they see on the mailpieces and how
the mailpiece looks at the time of delivery using defined shape measurement rules, while
RPW data come from the mailing statements entered at the many BMEU’s across the
country at the time of mailing. Examples of situations where a mailpiece can be correctly
recorded as a flat in PostalOne and as a letter in CCCS and RCCS follow.
In RCCS, it is possible that mailpieces exceeding ¼ inch in thickness that are “flats” on the
postage statement are recorded as one of the letter compensation categories if the
mailpiece is 6 1/8 inches or less in height and can be cased in the separations of the
carrier’s case. For example, small magazines less than 3/8 inch could be counted as
letters.
In CCCS, if a carrier is using a two case system and puts a flat in the letter case, the data
collector will count the flat-shaped mailpiece as a letter.
Certainly, human error is possible, whether it be at the carrier case or at the BMEU.
However, it must be noted that none of the noted differences constitute more than a minor
percentage of the total volume involved. A very small error in classification from the major
shape (periodical flat) to one of the minor shape (periodical letter) would be magnified in
RESPONSE OF POSTAL SERVICE WITNESS HARAHUSH TO
POIR NO. 5, QUESTIONS 16b, 16d, AND 16e
the small shape estimate. But by no means does the minor classification error even
indicate that there is a systematic data collection problem.
e. ODIS/RPW results are not used in any of the comparisons discussed in 16a
through 16d; the comparisons of estimates are between the carrier statistical systems and
data derived from PostalOne. Thus, an analysis of the relative reliability of ODIS/RPW
versus and the RCCS and CCCS surveys will not shed light on these issues.
In general, if “reliability” is construed as having lower statistical variance, then ODIS/RPW
will be more reliable than RCCS and CCCS respectively, because ODIS/RPW has a larger
quarterly sample size. However, if “reliability” is not construed in this sense, it is
impossible to answer the question about the general reliability without specifying a
particular mail category and a particular end use of the data, because the systems have
different purposes and use different rules in order to achieve different results.
Both CCCS and RCCS have very strict and detailed editing rules and error checks
embedded in their respective softwares and processes. The checks and editing processes
are discussed in LR -11 and LR -12. However, to recap the points of the library
references, there are data quality checks in each of the systems’ data entry software,
checks as the data are transferred from the laptop to the web base unit, weekly checks of
the data by headquarters personnel as the data are transferred from the web base unit to
the mainframe (including callbacks to field personnel), checks of the data on the sum of
RESPONSE OF POSTAL SERVICE WITNESS HARAHUSH TO
POIR NO. 5, QUESTIONS 16b, 16d, AND 16e
RCCS and CCCS to the quarterly RPW Report (rolled up to CRA rate levels over all
shapes) and checks of the RCCS and CCCS by personnel other than those in Statistical
Programs.
RESPONSE OF U.S. POSTAL SERVICE WITNESS MILANOVIC (USPS-T-9) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, 17a-b
Table 2
A
DPS
B
Sec Seg
C
Other
D
Flats
E
Parcels
Letters
Letters
Letters
Del
Del
1 Periodical Volume
(000)
15,602
DPS
2 Periodical Cost (000)
1
2-3
4-6
17.
Sec Seg
99,723
2,721,016
Letters
Flats
G
5,434
Parcels
243
84
4,495
144,278
1,538
0.0156
0.0442
0.0451
0.0530
0.2831
dLet/rDps
15,602
dLet/rSS
1,890
dFlat/rFlat
20,626
dFlat/rFlat
2,721,016
dPar/dPar
451
dFlat/rLet
79,097
dFlat/rPar
4,983
243
0.0156
84
0.0442
930
0.0451
144,278
0.0530
128
0.2831
3,565
0.0451
1,411
0.2831
3 Unit Cost
4 Periodical Volume
(000)
5 Periodical Cost (000)
6 Unit Cost
1,890
F
USPS-LR-L-5
File
Worksheet
"I-Forms.xls"
"I-CS10.RCS"
USPS-LR-L-67
File
Worksheet
"UDCModel.USPS.XLS"
"6.Rural Cost"
USPS-LR-L-67
File
Worksheet
"UDCModel.USPS.XLS"
"8.Rural Crosswalk"
Please confirm, with respect to the above table, the following (If not confirmed,
please explain fully):
a.
The volumes in A1-E1 are the Periodical Volumes (as measured by the
RCCS) used in Cost Segment 10 to distribute shape costs to subclass.
b.
The costs in A2-E2 are those found in CS10, worksheets 10.1.2 and
10.2.2.
RESPONSE:
a.
Confirmed that the periodical volumes, as measured by the RCCS, are
used to distribute costs in Cost Segment 10. The distribution of volume variable costs
by shape is a disaggregation performed in USPS-LR-L-67.
RESPONSE OF U.S. POSTAL SERVICE WITNESS MILANOVIC (USPS-T-9) TO
PRESIDING OFFICER’S INFORMATION REQUEST (POIR) No. 5, 17a-b
RESPONSE TO POIR No. 5, 17a-b (continued)
b.
Confirmed that the costs in A2-E2, which are part of LR-L-67, are also
found in CS 10, and are the sum of the individual values obtained from worksheets
10.1.2 and 10.2.2.
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
Table 2
1 Periodical Volume (000)
2 Periodical Cost (000)
3 Unit Cost
4 Periodical Volume (000)
5 Periodical Cost (000)
6 Unit Cost
1
2-3
4-6
17.
A
DPS
Letters
15,602
DPS
243
0.0156
dLet/rDps
15,602
243
0.0156
B
Sec Seg
Letters
1,890
Sec Seg
84
0.0442
dLet/rSS
1,890
84
0.0442
C
Other
Letters
99,723
Letters
4,495
0.0451
dFlat/rFlat
20,626
930
0.0451
D
E
F
G
Flats
Parcels
Del
Del
2,721,016
5,434
Flats
Parcels
144,278
1,538
0.0530
0.2831
dFlat/rFlat dPar/dPar dFlat/rLet dFlat/rPar
2,721,016
451
79,097
4,983
144,278
128
3,565
1,411
0.0530
0.2831
0.0451
0.2831
USPS-LR-L-5
File
Worksheet
"I-Forms.xls"
"I-CS10.RCS"
USPS-LR-L-67
File
Worksheet
"UDCModel.USPS.XLS"
"6.Rural Cost"
USPS-LR-L-67
File
Worksheet
"UDCModel.USPS.XLS"
"8.Rural Crosswalk"
Please confirm, with respect to the above table, the following (If not confirmed,
please explain fully):
a.
The volumes in A1-E1 are the Periodical Volumes (as measured by the
RCCS) used in Cost Segment 10 to distribute shape costs to subclass.
b.
The costs in A2-E2 are those found in CS10, worksheets 10.1.2 and 10.2.2.
c.
The unit costs in A3-E3 are those developed by the RCCS, used in
conjunction with the volumes found in A1-E1 to develop the CS10 costs
found in A2-E2.
d.
The volumes in A4-E4 are the Periodical Volumes found in the “8.Rural
Crosswalk” sheet, file UDCMODEL.USPS in LR-L-67, correlating to the
volume shift described earlier.
e.
The letters shifted to flats are considered “Other Letters,” and the cost shift,
per unit, is the “Other Letter” unit cost.
f.
The parcels shifted to flats are considered “Parcels,” and the cost shift, per
unit, is the “Parcels” unit cost.
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
Response
c. Not confirmed. The cost segment 10 costs are not derived using the unit
costs in Table 2. The costs are calculated in cost segment 10 are distributed to
subclass within each compensation category based on the volumes from RCCS.
After the cost segment 10 costs are distributed to subclass, USPS-LR-L67
calculates the unit costs as shown in Table 2.
d. Confirmed.
e. Confirmed.
f. Confirmed.
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
18.
Please explain:
a.
why pieces moved from Letters to Flats (see question 17.e.) incur costs as
“Other Letters;”
why pieces moved from Parcels to Flats (see question 17.f.) incur costs as
“Parcels.”
b.
Response
I am assuming that this question relates to Table 2 provided with the POIR, which
for purposes of this POIR response is attached to my response to item 17.
a.
The Rural Carrier Cost System (RCCS) records mail volume by compensation
category rather than shape. The data collectors record sampled pieces in accordance with
the rules used for the Rural Carrier Mail (RMC) counts which are utilized to compensate
rural carriers. The shifted volume from letters to flats represents an estimate of the
number of pieces that were recorded in the compensation category “Other Letters” by
RCCS but qualified as flats according to the DMM definition of flats.
The reason I used the “Other Letter” unit cost to shift the costs is that I assumed
that RCCS accurately captures the delivery cost consequences of sampled pieces. In this
instance, for each shifted piece, presumably, the rural carrier was compensated for either
a “DPS Letter”, “Sector Segment Letter”, or “Other Letters”. Since “DPS” and “Sector
Segment Letters” are automated and are designed to run on barcode sorters, I concluded
that pieces recorded as “Other Letters” as opposed to “DPS” or “Sector Segment” letters
had the dimensions that qualified them as flats according to the DMM. Therefore, the
shifted rural Periodical volume from letters to flats came from volume contained in the
“Other Letter compensation category.
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
b.
The Rural Carrier Cost System (RCCS) records mail volume by compensation
category rather than shape. The data collectors record sampled pieces in accordance with
the rules used for the Rural Carrier Mail (RMC) counts which are used to compensate rural
carriers. The shifted parcel to flat volume represents an estimate of the number of pieces
that were recorded in the compensation category “Parcels Delivered” by RCCS but
qualified as flats according to the DMM definition of flats.
The reason I used the unit costs for “Parcels” to shift the cost is that I assume that
RCCS accurately captures the delivery cost consequences of sampled pieces. For each
piece that was moved from parcels to flats, the rural carrier was compensated for that
piece at the parcel rate. Therefore, since each shifted piece actually incurred parcel
delivery costs equal to the corresponding unit parcel cost in the table, that cost was shifted
to flats in deriving unit delivery costs.
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
19.
Please provide, for cost segments 6 and 7, a table similar to Table 2, as well
as a rationale behind the cost shifts.
Response
I am assuming that this question relates to Table 2 provided with the POIR, which
for purposes of this POIR response is attached to item 17.
The objective of USPS-LR-L-67 is to calculate accurate delivery costs by rate
category. This involves both the shape – letter, flat, or parcel – and the content of the
mail. The denominator for all of the unit delivery costs is the total originating volume for
that rate category. However, the costs are largely dependent on the volumes recorded
from the city and rural carrier cost systems (CCS). Since the costs and volumes are
derived from different systems, the possibility exists that the estimated aggregate volume
from CCS, which provides a distribution key for cost segment 7 and 10 costs, exceeds
the estimated total originating volume. Some of the reasons for this occurring are
contained in response to POIR No 5. question 16 (b). Regardless of the specific reasons, I
think it is important to account for this result by making a reasonable adjustment to the
costs for the rate categories affected.
Specifically, for Periodical letters and parcels, CCCS estimates base year volumes
of 233,294 letters and 32,035 parcels, as compared with the estimates from RPW of
159,750 letters and 1,769 parcels. I concluded that deriving the unit delivery costs based
on unadjusted volumes would place too much cost burden on letters and parcels and
consequently lower the flats unit delivery cost. In an effort to develop a unit delivery cost
with costs in the numerator consistent with the volumes in the denominator, I made the
volume and cost adjustments that are used in USPS-LR-L-67 and that are summarized in
RESPONSE OF POSTAL SERVICE WITNESS KELLEY
TO POIR NO. 5
the attached spreadsheet.
The attached spreadsheet shows that $7.42 million were shifted from Periodical
letters to flats, and that $7.36 million were shifted from parcels to flats. Since city costs are
not derived with different costs pools for DPS and ‘Other’ letters, no distinction needed to
be made with regard to the cost of the type of letter that was shifted to flats. City parcel
costs, however, are divided between small and large parcels. After the magnitude of the
shift is determined, as many small parcels, up to the estimated volume, are shifted from
small parcels to flats Then the remaining volume, if any, that needs to be shifted comes
from the CCCS large parcel volume. The justification for this approach is that it seems
much more likely that pieces recorded as small parcels have dimensions that qualify as
flats according to the DMM. For Periodicals, the shift results in 23,343 small parcels and
7,909 large parcels which corresponded to $7.36 million in segment 6 and 7 costs being
shifted to flats.
Line No
(1)
(2)
(3)
Periodical Volume (000) (Unadjusted)
Periodical Volume (000) (Adjusted)
Volume Difference
Periodical Subclass Cost (000)
Periodicals Letters Cost (000) Unadjusted
Periodicals Flats Cost (000) Unadjusted
Periodicals Parcels Cost (000) Unadjusted
Periodicals Small Parcels Cost (000) Unadjusted
Periodicals Large Parcels Cost (000) Unadjusted
Periodical Subclass Cost (000)
Periodicals Letters Cost (000) Adjusted
Periodicals Flats Cost (000) Adjusted
Periodicals Parcels Cost (000) Adjusted
Periodicals Small Parcels Cost (000) Adjusted
Periodicals Large Parcels Cost (000) Adjusted
Cost Difference (adjusted - unadjusted)
Periodical Subclass Cost (000)
Periodicals Letters Cost (000) Adjusted
Periodicals Flats Cost (000) Adjusted
Periodicals Parcels Cost (000) Adjusted
Periodicals Small Parcels Cost (000) Adjusted
Periodicals Large Parcels Cost (000) Adjusted
Letter
(includes
Total
Total
DPS)
Flat
Small Parcel Large Parcel Parcels
Volume
233,294
5,211,119
23,243
8,792
32,035
5,476,448
87,800
5,387,766
883
883
5,476,448
(145,494)
176,647
(23,243)
(7,909)
(31,152)
-
6.1 Direct
Labor
(1)
$ 259,620
$
5,281
$ 253,279
$
1,060
6.2 Support
Other
(burdened
6.2 Support on Office)
(3)
Overhead (2)
$
59,591 $
11,140
$
1,212 $
227
$
58,136 $
10,868
$
243 $
45
6.2 Support
Other
(burdened
on Letter
Routes)
(4)
$
4,459
$
168
$
4,077
$
214
6.2 Support
Other
(burdened
on SPR
Street)
(5)
$
68
$
3
$
65
$
0
6.2 Support
(6)
$
75,258
$
1,609
$
73,145
$
503
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
259,620
1,987
257,603
29
(3,293)
4,324
(1,031)
$
$
$
$
59,591
456
59,128
7
(756)
992
(237)
$
$
$
$
$
$
$
$
11,140
85
11,053
1
(141)
186
(44)
$
$
$
$
4,459
63
4,386
9
(105)
310
(205)
$
$
$
$
68
1
67
0
-
$
(2) $
2 $
(0) $
7.1 Delivery
Activities
Total Segment Letter Routes
(8)
6 (7)
$
334,878 $
112,742
$
6,890 $
4,243
$
326,425 $
103,080
$
1,563 $
5,419
$
3,062
$
2,357
75,258
606
74,635
17
$
$
$
$
(1,004)
1,490
(486)
$
$
$
$
334,878
2,593
332,238
47
(4,297)
5,814
(1,517)
$
$
$
$
$
$
$
$
$
$
$
$
112,742
1,597
110,908
237
237
(2,646)
7,828
(5,182)
(3,062)
(2,120)
7.1 Delivery
Activities
Special
Purpose
Routes
(9)
$
4,447
$
189
$
4,231
$
26
$
19
$
7
$
$
$
$
$
$
$
$
$
$
$
$
4,447
71
4,375
1
1
(118)
143
(25)
(19)
(6)
7.1 Total
Costs
(10)
$ 117,189
$
4,432
$ 107,312
$
5,445
$
3,081
$
2,364
7.2
Support
Activities
Letter
Routes
(11)
$ 13,676
$
515
$ 12,504
$
657
$
371
$
286
7.2
Support
Activities
Special
Purpose
Routes
(12)
$ 1,492
$
64
$ 1,420
$
9
$
6
$
2
Total Cost
Segment 7 (13)
$
132,357
$
5,010
$
121,235
$
6,111
$
3,458
$
2,653
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
117,189
1,668
115,283
237
237
(2,764)
7,972
(5,208)
(3,081)
(2,127)
$
$
$
$
$
$
13,676
194
13,453
29
29
(321)
950
(629)
(371)
(257)
$
$
$
$
$
$
1,492
24
1,468
0
0
(40)
48
(8)
(6)
(2)
$
$
$
$
$
$
132,357
1,886
130,205
266
266
(3,125)
8,969
(5,845)
(3,458)
(2,386)
Total Cost
Segments 6
and 7 (14)
$ 467,235
$ 11,900
$ 447,660
$
7,674
$
3,458
$
2,653
$ 467,235
$
4,479
$ 462,443
$
313
$
$
$
$
(7,422)
14,783
(7,361)
Line No - Source
(1) USPS-LR-L-5 - I FORMS.xls
(2) USPS-LR-L-67 - VolAdj.USPS.xls - PeriodicalVolAdj
(3) (2) - (1)
Column No - Source
(1) - USPS-LR-L-67 - UDCInputs.USPS - CARMM
(2) Ratio of 6.1 Costs - USPS-LR-L-67 - UDCInputs.USPS - CS6&7CRA
(3) Ratio of 6.1 Costs - USPS-LR-L-67 - UDCInputs.USPS - 7.06
(4) Ratio of 7.1 Letter Route Costs - USPS-LR-L-67 - UDCInputs.USPS - 7.06
(5) Ratio of 7.1 Special Purpose Route Costs - USPS-LR-L-67 - UDCInputs.USPS - 7.06
(6) (2) + (3) + (4) + (5)
(7) (1) + (6) - USPS-LR-L-67 - UDCInputs.USPS.xls - CS6&7CRA
(8) USPS-LR-L-67 - UDCInputs.USPS.xls - CS67SHAPE
(9) Ratio of Delivered Volumes - USPS-LR-L-67 - UDCInputs.USPS - 7.06
(10) (8) + (9) - USPS-LR-L-67- UDCInputs.USPS.xls - CS6&7CRA
(11) Ratio of 7.1 Letter Route Costs - USPS-LR-L-67 - UDCInputs.USPS - 7.06
(12) Ratio of 7.1 Special Purpose Route Costs -USPS-LR-L-67 - UDCInputs.USPS - 7.06
(13) (10) + (11) + (12) - USPS-LR-L-67- UDCInputs.USPS.xls - CS6&7CRA
(14) (7) + (13)-USPS-LR-L-67- UDCInputs.USPS.xls - CS6&7CRA
Response to POIR No 5 Item 19